Senate Minority Leader Mitch McConnell is offering Democrats a way to raise the debt limit briefly and keep the nation from tipping into default in the short term, and Majority Leader Chuck Schumer says a deal appears near.
Though he's led Republicans in filibustering or blocking Democrats from passing an extension of the debt limit under regular Senate procedure so far, McConnell said Wednesday he'll allow them to pass an emergency extension of the debt limit without the threat of a filibuster. To overcome a filibuster, Democrats needed 60 votes, and there are only 50 Democrats in the Senate.
Speaking on the Senate floor right around midnight, Schumer said Democrats and Republicans "have been negotiating all afternoon and all night. ... We are making good progress. We're not there yet but I hope we can come to an agreement tomorrow morning."
The two sides have been in a standoff for weeks over addressing the debt limit, and McConnell's reversal came as the U.S. was faced with the dire possibility that in less than two weeks, it would no longer be able to pay its bills.
In his statement Wednesday, McConnell said Republicans would "allow Democrats to use normal procedures to pass an emergency debt limit extension at a fixed dollar amount to cover current spending levels into December."
Until Wednesday, McConnell had beenprocess to address the debt limit and said Republicans would not enable them to move quickly to address the debt ceiling on their own.
Democrats countered that reconciliation, used for budget legislation, is a complex process that could take too long to execute before the government runs out of borrowing authority.
"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," McConnell said of his offer. "Alternatively, if Democrats abandon their efforts to ram through another historically reckless taxing and spending spree that will hurt families and help China, a more traditional bipartisan governing conversation could be possible."
Treasury Secretary Janet Yellen warned Congress in late September it needed to act by October 18 to address the debt limit or the government would be unable to pay its bills and would likely go into default for the first time. She called the consequences of default catastrophic and said that the mere act of delaying the process could lead to higher costs for Americans.
On Wednesday, President Biden and Yellen met with business leaders at the White House who pushed for the debt ceiling to be addressed as quickly as possible, saying the uncertainty was already contributing to volatility in the markets. JP Morgan Chase CEO Jamie Dimon warned that a default could lead from a recession to "complete catastrophe for the global economy."
President Biden and Democrats in recent days acknowledged Senate Republicans were not going to work with them to address the debt ceiling and implored them to "get out of the way" and let them address it alone. But Senate Republicans blocked several efforts by Democrats to raise the debt ceiling with just their own votes in a simple majority, rather than the 60 votes necessary to avoid a filibuster.
McConnell's offer Wednesday would give Democrats more time to figure out how to use the budget reconciliation process to raise the debt limit for a longer period of time. It would also give them the ability to try to finish work on the Build Back Better social safety net bill before turning to a long-term increase in the debt ceiling.
But the White House said on Wednesday there are less risky options still available, and it would rather not just "kick the can down the road" for several more weeks.
"The preference would just be getting this done today, so we can move on to more business for the American people and that option is still on the table," press secretary Jen Psaki said, making reference to the Senate vote that was supposed to take place Wednesday on a House-passed bill to suspend the debt ceiling. If 10 Republicans were to join Democrats in voting to advance this bill, Democrats would be able to extend the debt limit by passing the bill with just a simple majority of 50, plus the vote of the Senate president, Vice President Kamala Harris. The bill was not expected to attract GOP support and has been delayed.
If Schumer accepts McConnell's proposal, default will be averted for a couple of months. But by December, if Democrats still haven't passed the Build Back Better measure, Congress could find itself where it was days ago — teetering on the precipice of both default and a government shutdown. Republicans joined Democrats last week in extending funds to keep the government up and running until December.
Nancy Cordes and Brian Dakss contributed to this report.
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