Sen. Susan Collins floats GOP support for a debt-limit hike in exchange for Democrats abandoning Biden's $3.5 trillion social-spending plan

• Sen. Susan Collins linked the debt limit to negotiations over President Joe Biden's economic agenda.
• Democrats flatly dismissed Collins' suggestion that they abandon Biden's $3.5 trillion plan.
• Republicans are refusing to raise the debt limit in a standoff that's pushing the US toward default.

Sen. Susan Collins of Maine suggested Senate Republicans could back a debt-limit hike if Democrats abandoned the $3.5 trillion social-spending package containing the bulk of President Joe Biden's economic agenda.

On Monday, she told reporters that "some Republicans would vote to raise the debt limit if they knew the Democrats were going to abandon the $3.5 trillion package, which appears unlikely, but that's an agreement that could be reached."

The Maine Republican echoed Senate Minority Leader Mitch McConnell and urged Democrats to lift the debt ceiling unilaterally through the budget process known as reconciliation. The party is already trying to use that maneuver to approve its hefty social-spending plan, relying on only Democratic votes and bypassing unanimous GOP opposition.

McConnell issued a fresh warning in a letter to Biden on Monday. "For two and a half months, we have simply warned that since your party wishes to govern alone, it must handle the debt limit alone as well," the letter said, adding Democrats were "sleepwalking toward significant and avoidable danger."

In addition to climate initiatives, congressional Democrats in their spending proposal hope to expand Medicare and Medicaid, ensure families can access and afford childcare, add four years to public education with universal pre-K and tuition-free community college, and renew monthly cash payments to families. They seek to pass it by the end of the month.

The debt limit refers to the amount the US can borrow to pay off existing debts. Raising it does not authorize future spending. Democrats are insisting they won't renew the nation's ability to pay its bills on their own, arguing it's a responsibility for both parties to assume.

They also flatly dismissed scrapping Biden's sprawling domestic agenda in exchange for GOP support to lift the debt ceiling as a nonstarter.

"Senate Republicans are holding our economy hostage," Rep. Don Beyer of Virginia, the chair of the Joint Economic Committee, said in a tweet. "Mitch McConnell claimed he isn't making demands for lifting the debt ceiling, but Susan Collins gave the game away: They're demanding the President abandon the agenda the American people elected him to pass."

"This reflects the general attitude of the Republican conference to burn it all down when out of power," a Senate Democratic aide granted anonymity to speak candidly told Insider.

The impasse over the debt limit heightened Monday as Biden assailed Senate Republicans for blocking Democratic efforts to approve a debt-limit hike with bipartisan support. During a Monday press conference he called their moves "hypocritical, dangerous, and disgraceful."

He also couldn't guarantee the US would be able to avoid a potentially catastrophic default. "That's up to Mitch McConnell," he said.

Republicans like McConnell agree the debt ceiling must be raised, but they're pushing for Democrats to use reconciliation, which would require approving a specific number that Republicans could use to hammer Democrats as budget busters in next year's midterms.

The Treasury Department has warned it may not be able keep the government's financial obligations beyond October 18. Such an event could cause turmoil in financial markets and plunge the US back into a recession.

Democrats have sharply challenged the GOP's rationale for opposing lifting the debt cap, arguing that Republicans helped pile onto the federal debt with emergency spending during the coronavirus pandemic and domestic spending increases under President Donald Trump. Republicans also lifted or suspended the debt ceiling three times under the Trump administration.

"Every single day we delay taking action, we increase the chances of doing irreversible damage to our global financial system, our economic recovery, and trust in our country's ability to pay its debts," Senate Majority Leader Chuck Schumer said in a floor speech Monday.

Lifting the debt ceiling on their own could be time-consuming for Democrats, with no guarantee they could pull it off ahead of October 18 given the strict guidelines governing reconciliation.