Washington (AFP) - Lawmakers returned to Washington Monday staring down a critical holiday season to-do list that juggles President Joe Biden's domestic spending priorities with keeping the government open and averting a catastrophic debt default.

Senators are bracing for what is shaping up to be the one of the most grueling Decembers in years, with defense funding and the expanding probe into the January 6 insurrection on Capitol Hill likely to add to the workload. 

But the top priority is government funding, with federal agencies due to run out of cash on Friday. 

A lasting deal to avoid a damaging shutdown would require agreement on spending bills for the 2022 fiscal year, as the government is still funded at levels approved during Donald Trump's administration. 

With no consensus in sight, House leaders are expected to introduce a stop-gap funding bill through January, with a vote as early as Wednesday, to avoid thousands of public employees being sent home without pay. 

"We begin an important week for what will be an important final month of 2021... With so many critical issues, the last thing the American people need right now is a government shutdown," the Senate's Democratic leader Chuck Schumer said on the floor.

Next up, Treasury Secretary Janet Yellen says the government must raise the debt ceiling by December 15 to avoid a credit default that would leave the country unable to repay debts or secure new loans. 

With Wall Street and world markets watching closely, Schumer and his minority Republican counterpart Mitch McConnell remain at odds over how to handle the extension.

McConnell says the Democrats need to boost the debt limit on their own as they assemble a $1.8-trillion package of new social spending and climate programs.

The Kentucky Republican insisted when the fight came up in October that his senators would not help but was criticized by his own side for caving and lining up 11 Republicans to pass a temporary extension. 

The Democrats point out that Republicans helped run up debts and so should help raise the ceiling in the normal way, with backing from both parties.  

'Moving forward'

"You know, if the Republicans want to scrooge out on us, and increase people's interest rates and make it hard to make car payments -- go ahead, make that case," Democratic Senator Amy Klobuchar told ABC on Sunday. 

"We're going to stop them from doing that."

The Senate is also due to take up the National Defense Authorization Act, a massive bill that Congress has reliably passed for six decades. 

Democrats are hoping to wave it through this week, but Republicans could scupper that timeline by demanding votes on an array of amendments from Afghanistan policy and repealing Iraq War authorizations to women registering for the military draft and the US-China relationship. 

Biden heads into the New Year with support waning among independent voters -- a key group that helped catapult him to the White House -- over the gridlock on Capitol Hill, spiraling inflation and the stubborn pandemic. 

Progressive and moderate Democrats are still fighting over crucial, high-dollar parts of Biden's Build Back Better package, which Schumer is hoping to send back to the House for a rubber stamp before Christmas Day.

The bill, passed by the House earlier in November, is a grab-bag of policies to improve benefits for children, college students, seniors, health care coverage and to help rescue a warming planet.    

But moderates Joe Manchin and, to a lesser extent, Kyrsten Sinema are at odds with the rest of the party over several provisions, including paid family leave and health care expansion. 

"We had some of our senior officials meeting with the budget committee... I think they had two meetings over the last several days," Biden’s spokeswoman Jen Psaki told reporters.

"We had a number of our senior White House officials meeting with Leader Schumer's team last night. So I can assure you we are moving forward full speed to get this done and we expect action on it in the coming weeks."