Republican and Democratic leaders edged back from a perilous standoff over lifting the nation’s debt limit, with Democratic senators signaling they were receptive to an offer from Senate GOP leader Mitch McConnell that would allow an emergency extension into December.
McConnell made the offer late Wednesday shortly before Republicans were prepared to block legislation to suspend the debt limit until December of next year and as President Joe Biden and business leaders ramped up their concerns that an unprecedented federal default would disrupt government payments to millions of people and throw the nation into recession.
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The emerging agreement sets the stage for a sequel of sorts in December, when Congress will again face pressing deadlines to fund the government and raise the debt limit before heading home for the holidays.
A procedural vote — on the longer extension the Republicans were going to block — was abruptly delayed late Wednesday and the Senate recessed so lawmakers could discuss next steps. Democrats emerged from their meeting more optimistic that a crisis would be averted.
“Basically, I’m glad that Mitch McConnell finally saw the light,” said Bernie Sanders, the independent senator from Vermont. The Republicans “have finally done the right thing and at least we now have another couple months in order to get a permanent solution.”
Sen. Chris Murphy, D-Conn., added that, assuming final details in the emergency legislation are in order, “for the next three months, we’ll continue to make it clear that we are ready to continue to vote to pay our bills and Republicans aren’t.”
Unsurprisingly, McConnell portrayed it very differently.
“This will moot Democrats’ excuses about the time crunch they created and give the unified Democratic government more than enough time to pass standalone debt limit legislation through reconciliation,” he said.
Congress has just days to act before the Oct. 18 deadline when the Treasury Department has warned it would quickly run short of funds to handle the nation’s already accrued debt load.
McConnell and Senate Republicans have insisted that Democrats would have to go it alone to raise the debt ceiling and allow the Treasury to renew its borrowing so that the country could meet its financial obligations. Further, McConnell has insisted that Democrats use the legislative process called reconciliation that they used to force through a $1.9 trillion COVID-19 relief bill and have been employing to try to pass Biden’s $3.5 trillion spending plan.
McConnell said in his offer Wednesday that Republicans would still insist that Democrats use the reconciliation process for a long-term debt limit extension. However, he said Republicans are willing to “assist in expediting” that process, and in the meantime Democrats may use the normal legislative process to pass a short-term debt limit extension with a fixed dollar amount to cover current spending levels into December.
The Biden administration warned that if the borrowing limit wasn’t extended, it would set off an international financial crisis the United States might not be able to manage.
“A default would send shock waves through global financial markets and would likely cause credit markets worldwide to freeze up and stock markets to plunge,” the White House Council of Economic Advisers said in a new report. “Employers around the world would likely have to begin laying off workers.”
The Associated Press contributed to this article