Senate Democrats and Republicans were close to reaching an agreement in the early morning hours of Thursday to keep the country from defaulting on its debt. After bowing to pressure to avoid immediate fiscal calamity, Republicans agreed to postpone their confrontation on extending the federal borrowing limit until December.
Mitch McConnell, the Senate minority leader from Kentucky, made a tactical retreat on Wednesday, The New York Times said. Republicans would allow Democrats to vote on a short-term extension, he said. He did not, however, relinquish his opposition to a longer-term debt ceiling hike. McConnel went so far as to suggest that Democrats use reconciliation, a rigorous and time-consuming budget procedure, to extend the bill into next year or beyond.
Suspension Of Debt Ceiling A Temporary Triumph?
Democrats hailed the compromise as a “temporary triumph,” even as they vowed never to give in to Mr. McConnell’s longer-term demands. Senators worked late into the night to try to iron out the specifics. Still, majority leader Senator Chuck Schumer of New York adjourned the Senate for the day long after midnight Thursday without reaching a clear agreement.
Republicans will only participate in a “typical bipartisan” conversation if Democrats cut their planned $3.5 trillion spending bill, McConnell said in a statement (via Forbes) on Wednesday.
Treasury Secretary Janet Yellen has stated that unless the debt ceiling is lifted by October 18, the United States will default on its debts for the first time in history, resulting in “catastrophic” economic consequences.
Because Democrats control both Congress and the White House, McConnell believes they should act alone to raise the debt ceiling. Democrats had effectively locked off their options for acting without Republican support before McConnell’s suggestion. According to Schumer, attempting to raise the debt ceiling through the budget reconciliation process before the October 18 deadline. President Joe Biden suggested the concept of eliminating the filibuster when it comes to votes on extending the debt ceiling on Tuesday. However, doing so would require the approval of every Senate Democrat, and West Virginia’s Joe Manchin has already stated that he will not support ending the filibuster.
Congress Juggles With $3.5T Spending Bill
Democrats in Congress are also juggling a $3.5 trillion spending bill and a $1.2 trillion infrastructure bill. Both of which are stalled due to a split in the Senate between centrist and progressive Democrats. Progressives in the House have threatened to vote no on the infrastructure bill, which has already passed the Senate, unless it is followed by a vote on the social spending plan, which moderate senators such as Manchin and Arizona’s Kyrsten Sinema have declared they reject.
Because the $3.5 trillion bill has no Republican backing, Democrats are hoping to pass it through the reconciliation procedure in the Senate. However, given the chamber’s 50-50 split, the bill would fail if even one Democrat voted against it. Manchin has set a spending limit of $1.5 trillion for the package. President Joe Biden believes he can reach an agreement with senators on a more costly package at $1.9 trillion to $2.2 trillion.