Democrats Signal They’ll Accept Short-Term Debt Ceiling Hike
(Bloomberg) -- Democrats signaled they would take up Senate Republican leader Mitch McConnell’s offer to raise the U.S. debt ceiling into December, alleviating the immediate risk of a default but raising the prospect of another bruising political fight near the end of the year.
Senate Majority Leader Chuck Schumer said early Thursday that the two sides were “making good progress” and that he hoped to have an agreement worked out by the morning.
The Senate on Wednesday delayed a planned attempt by Democrats to advance legislation to suspend the debt limit, which Republicans were poised to block.
McConnell’s offer was designed to call Democrats’ bluff after they said the reconciliation process was too lengthy to be used as a tool to boost the borrowing limit before the deadline estimated for later this month, according to a person familiar with his thinking. It also publicly showed Republicans were willing to be flexible with a default edging closer, the person said.
It also came after President Joe Biden late Tuesday remarked to reporters about discussions underway among Senate Democrats to temporarily change the chamber’s filibuster rule to allow the debt ceiling measure to go through, saying it was a “real possibility.” Still, all Democrats in the Senate would have to go along with that, and Democratic Senator Joe Manchin of West Virginia told reporters Wednesday he wouldn’t support that course of action.
Democrats said they were still waiting to see McConnell’s proposal in writing, but said the two-month extension would give the party time to focus on internal negotiations over Biden’s $4 trillion economic agenda, without spending weeks litigating the debt ceiling on the Senate floor this month.
The Republican plan would increase the limit on federal borrowing by a fixed dollar amount that would be sufficient to tide the Treasury over until December, when Congress would have to vote again to avoid a default. That vote could come at about the same time Democrats attempt to move a massive tax and spending package.
That’s also when Congress will have to act again to fund the government as part of regular fiscal-year spending, and avert a shutdown after Dec. 3.
Democrats said no decision has been made on what they will do when the debt ceiling issue comes to a head again in December. They said they will continue to oppose using a process called reconciliation to pass a longer-term increase in the limit with only Democratic votes, which McConnell has demanded.
“We’re going to pay our debts, we have two months to figure out where we go from here,” Senate Budget Chair Bernie Sanders said.
McConnell made his offer as he was coming under increasing criticism from Biden and Democrats that he was acting recklessly by blocking attempts to lift the debt limit, risking economic calamity. The attempt at a compromise also reflects increasing nervousness from some Republican senators that the country was moving too close to the brink of default.
While Democrats declared it a victory, it leaves them in a politically difficult bind. In about two months they will be facing the same fight, and have yet to articulate a strategy to avoid it. And unless Republicans capitulate, Democrats will be forced to set a dollar amount on how much they want to raise the debt ceiling, a number that is sure to be used in GOP ads during the 2022 campaign for congressional elections.
McConnell’s attempt to force Democrats to use the reconciliation process to raise the debt ceiling would leave Republicans entirely removed from the process. Schumer has repeatedly said there wasn’t enough time for reconciliation, which budget experts say would take about two weeks. Treasury Secretary Janet Yellen had warned lawmakers her department could run out of cash around Oct. 18 without legislative action to address the debt limit.
©2021 Bloomberg L.P.