WASHINGTON (WNN) — Republican and Democratic leaders shrugged off an alarming impasse on Wednesday over lifting the nation’s borrowing limit, with Democratic senators indicating they were receptive to a proposal from Senate GOP leader Mitch McConnell that was set for a resolution in December. Will allow emergency extension.
McConnell proposed that Republicans were ready to block legislation to suspend debt limits until December next year, and President Joe Biden and business leaders intensified their concerns that an unprecedented federal default would cost millions of people in government payments. will disrupt and throw the nation into recession.
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 – a long time Republicans were going to block – was suddenly delayed late Wednesday and enlisted Senate so lawmakers could discuss next steps. Democrats emerged from their meeting more optimistic that a crisis would be averted.
“Basically, I’m glad Mitch McConnell finally saw the light,” said Sen. Bernie Sanders, an independent senator from Vermont. Republicans have “finally done the right thing and at least we have a few more months to find a permanent solution.”
Sen. Chris Murphy, D-Conn, said while admitting that the final details in the emergency law are in order, “For the next three months, we will continue to make clear that we are prepared to continue voting to pay our . Bill and Republicans are not.”
Unsurprisingly, McConnell portrayed it very differently.
“This would erase the Democrats’ excuses about the lack of time they made and give the unified Democratic government enough time to pass standalone debt ceiling legislation through conciliation,” he said.
Congress has only a few days to act before the October 18 deadline when the Treasury Department has warned it will lack funds to handle the country’s already accrued debt load.
McConnell and Senate Republicans have insisted that Democrats will have to go it alone to raise the debt limit and allow the Treasury to renew its borrowings so the country can meet its financial obligations. In addition, McConnell has insisted that Democrats use the same cumbersome legislative process called reconciliation that they used to pass the $1.9 trillion COVID relief bill and Biden’s plan to boost safety nets, health and environmental programs. Are planning to try and pass the $3.5 trillion measure.
McConnell said in his motion on Wednesday that Republicans would still insist that Democrats use the reconciliation process for long-term debt limit expansion. However, he said Republicans are willing to “accelerate aid” in that process and in the meantime Democrats can use the normal legislative process to pass a short-term debt limit extension.
While he continued to blame the Democrats, his offer would also allow Republicans to avoid the condemnation he would have received from some quarters for causing the financial crisis.
Earlier on Wednesday, Biden called on top business leaders to push for immediate suspension of the debt limit, saying the deadline poses the risk of a historic default that would be like a “meteor” that could affect the economy and the economy. could crush the financial markets.
At a White House event, the president shamed Republican senators for threatening to block any suspension of the $28.4 trillion cap on the government’s lending authority. He leaned into the credibility of Corporate America — a group that has traditionally been aligned with the GOP on tax and regulatory issues — as the heads of Citi, JPMorgan Chase and Nasdaq personally to drive his point home. And in fact the limit has to be raised to say debt.
“It’s not right and it’s dangerous,” Biden said of the resistance by Senate Republicans.
His move comes amid speculation that Democrats may try to change Senate filibuster rules to go around Republicans. But Sen. Joe Manchin, DWV, reiterated his opposition to such a change on Wednesday, possibly taking it off the table for Democrats.
Business leaders echoed Biden’s talk about the need to end the impasse as quickly as possible, though he shrugged off partisan tensions in doing so. Each portrayed the debt ceiling as an avoidable crisis.
“We can’t wait until the last minute to get this sorted out,” said Bank Citi CEO Jane Fraser. “We are simply playing with fire right now, and our country has suffered a lot over the years. The human and economic cost of the pandemic has been dire, and we do not need the devastation of our own making. ”
Nasdaq Stock Exchange CEO Adena Friedman said financial markets have yet to fully register the drama in Washington, although there are signs they are becoming troubled.
Stock prices rose after news of McConnell’s offer emerged.
Before the White House meeting, the administration warned that if borrowing limits were not raised, it could lead to an international financial crisis that the United States may not be able to manage.
“A default would send shock waves through global financial markets and freeze credit markets around the world and plunge stock markets,” the White House Council of Economic Advisors said in a new report. “Employers around the world will probably have to start laying off workers.”
The report said the recession that could begin could be worse than the 2008 financial crisis as it would come as many countries still grapple with the COVID-19 pandemic. It was first obtained by The New York Times.
Biden indicated in off-the-cuff remarks on Tuesday that Democrats were weighing changes to Senate rules to address the impasse in the Senate.
“It’s a real possibility,” Biden told reporters outside the White House.
But Manchin, who has resisted pressure from liberal activists for months to allow Democrats to push legislation on other issues such as voting rights, appeared adamant.
“I think I’m very clear,” Munchkin told reporters. “nothing changes.” He urged Senate Majority Leader Chuck Schumer and GOP Leader McConnell to work together to resolve the impasse.
Getting rid of the filibuster rule would lower the typical 60-vote limit for passage of 50. In a 50–50 split in the Senate, Vice President Kamala Harris could then break a tie, allowing the Democrats to trail the Republicans. But to be successful in changing the rules, all Democratic senators have to join the board.
Once a routine affair, raising debt limits over the past decade or more has become politically treacherous, used by Republicans in particular to rail against government spending and rising debt loads.
WNN Business Writer Stan Cho contributed from New York.