Senate Minority Leader Mitch McConnell (R-Ky.) said that Republicans are willing to agree to raise the federal government’s borrowing limit high enough to avert a debt default crisis for two months, a short-term extension Democrats appeared ready to accept on Wednesday.
The offer represented the first flinch in a game of chicken that threatened to result in the U.S. failing to pay its debt sometime this month, with potentially catastrophic effects on the global economy. A vote on the short-term extension could come as early as Wednesday or Thursday, pending a final agreement between Senate leaders.
“McConnell caved, and now we’re going to spend our time doing child care, health care and fighting climate change,” Sen. Elizabeth Warren (D-Mass.) said after a closed-door meeting with her Democratic colleagues, referring to the Democrats’ big legislative proposal, known as the Build Back Better Act.
McConnell said Republicans would allow Democrats to pass an emergency debt limit extension “at a fixed dollar amount” to cover current spending levels into December. The short-term extension, he added, would give Democrats enough time to raise the debt limit for a longer period via the Senate’s budget reconciliation process.
But Democrats say they won’t do that now or in December. They had initially scheduled a vote on a standalone debt limit increase for Wednesday afternoon, but that vote was put off after McConnell floated the short-term extension.
“We’re definitely not using reconciliation for this,” Sen. Debbie Stabenow (D-Mich.) told reporters.
With their decision to punt on the issue until December, Congress is essentially setting up the same debate over the debt limit in a few months, when other budget items are scheduled to come due, such as the expiration of government funding on Dec. 3. The threat of a catastrophic default appears to be averted for now, at least.
In the past, Congress has typically raised the debt ceiling on a bipartisan basis or with a simple up or down vote. This time, however, Senate Republicans have refused to allow even a simple majority vote that would let Democrats raise the debt limit on their own.
Treasury Secretary Janet Yellen has said the government will start defaulting on debts sometime around Oct. 18, and that doing so would spook financial markets and cause a recession.
Democrats had previously been talking up the possibility of raising the debt limit by making an exception to the filibuster, but Sen. Joe Manchin (D-W.Va.) shot down that idea earlier on Wednesday.
In his statement, McConnell questioned whether Democratic leaders’ refusal to deal with the debt limit sooner amounted to “a deliberate effort to bully their own members into wrecking the Senate” by chipping away at the filibuster.
Since July, Republicans have been urging Democrats to raise the debt ceiling via reconciliation, a messy and potentially lengthy budget process they would rather avoid. Republicans could potentially force votes on an unlimited number of amendments designed to maximize Democratic divisions. Democrats would also need to raise the debt ceiling by a specific number, rather than simply suspend it, generating even more fodder for GOP campaigns.
“Our members, I think, would be cooperative with not making that unwieldy or unnecessarily time-consuming,” Senate Minority Whip John Thune (R-S.D.) said. “There’s a way to get to the finish line here, with plenty of time to spare.”
But Democratic leaders have resisted the idea because they say it would be too lengthy and cumbersome. Any GOP senator could object to expediting the process no matter what their leaders say about shortening the time needed to complete it.
For the moment, at least, Democrats are choosing to take McConnell’s offer as a win that will allow them to shift gears to passing Biden’s legislative agenda, which has been delayed amid a dispute between progressives and moderates within the Democratic Party.
Appearing on CNN on Wednesday, Sen. Tammy Baldwin (D-Wis.) called it “a temporary victory with more work to do.”
“I know that in the short-term, the benefit to the country is that we can have a conversation about the president’s agenda without this crisis hanging over us,” Sen. Chris Murphy (D-Conn.) said.