Senate Minority Leader Mitch McConnell (R-KY) offered a short-term debt ceiling extension into December, a proposal to call Majority Leader Chuck Schumer (D-NY) bluff by giving Senate Democrats more time to pass a longer debt-ceiling hike on their own through the process of reconciliation.
“Republicans remain the only party with a plan to prevent default. We have already made it clear we would assist in expediting the 304 reconciliation process for stand-alone debt-limit legislation,” McConnell said in a statement.
McConnell stated the emergency debt limit extension would be passed through normal procedures with no GOP standing in the way at a “fixed dollar amount,” to sustain the current government’s spending until Dec. 3.
“This will moot Democrats’ excuses about the time crunch they created and give the unified Democratic government more than enough time to pass stand-alone debt limit legislation through reconciliation. Alternatively, if Democrats abandon their efforts to ram through another historically reckless taxing and spending spree that will hurt families and help China, a more traditional bipartisan governing conversation could be possible,” McConnell said.
While Democrats were interested in a two-month extension of the borrowing cap, they showed little to no interest in taking up McConnell’s other suggestion — use the 2 months to craft a longer-debt ceiling measure through the budget reconciliation process that can be passed with a simple majority vote in the evenly divided Senate.
to hike the government’s $28.4 trillion debt ceiling
Schumer called off a Wednesday afternoon vote to bring the House-passed bill that would have suspended the debt ceiling until December 2022 — after the midterm elections, as he assemble a caucus meeting with Senate Democrats to decide whether to accept McConnell’s proposal.
The standoff caps off both sides stalling awaiting the next move. Democrats were considering other options Tuesday evening to pass the debt ceiling measure after Republicans blocked two previous votes last week. The options Senate Democrats were floating consisted of a carve-out to the Senate filibuster for a single usage to vote on this measure.
However, Sen. Joe Manchin (D-WV) a key centrist Democrat reiterate his stance against changing the filibuster rules.
“I’ve been very, very clear where I stand on the filibuster. Nothing changes,” Manchin told reporters Wednesday.
Treasury Secretary Janet Yellen has repeatedly warned that Congress has until Oct. 18 before Treasury exhausts its cash reserves, causing the U.S to default and cause a “catastrophic” impact on the economy and financial markets.
President Biden in a virtual meeting with business CEOs at a makeshift White House studio dramatically claimed that a “meteor” is heading “to crash into our economy” if the Senate doesn’t raise the debt ceiling, pointing the fingers solely at Republicans if the U.S defaults despite his push for $5 trillion in new spending on social programs.
“The United States is the financial rock the world looks to and trusts. Now in one cynical destructive partisan ploy — just for politics — our Republican friends are teetering on that brink here. They are threatening to boot that all away,” Biden told the business leaders before McConnell’s announcement. “Now it’s a meteor headed to crash into our economy. We should all want to stop it and stop it immediately. This shouldn’t be partisan.”
Senate Democrats indicated following a closed-door caucus meeting that they will accept McConnell’s offer to raise the debt ceiling into December.
The deal if Senate Democrats accept would put Congress in two months facing two major deadlines, including funding the government for the FY2022. On top of the government funding and debt ceiling, Democrats are eager to pass their two massive spending bills in the coming weeks, after last week infighting amongst Democrats almost jeopardized the two domestic bills entirely.
Following McConnell’s announcement, Stock indexes rose just an hour before the closing bell, easing investors’ worries over the debt deadline.