Senate leaders reached a bipartisan agreement Wednesday to defuse the impending debt limit crisis by allowing for a short-term increase in the statutory borrowing cap while lawmakers negotiate a longer-term solution.
Democrats said they would agree to an offer from Minority Leader Mitch McConnell that would pave the way for an increase in the debt limit into December. But the two parties still disagreed on any long-term strategy.
“It would have been a disaster if this did not happen, and I’m glad that Mitch McConnell finally conceded the point that we have to pay our debts incurred under Trump,” said Budget Chairman Bernie Sanders, a Vermont independent who caucuses with Democrats. “And let’s get this done as quickly as possible.”
Sanders said Democrats would not accept McConnell’s insistence on passing any long-term debt limit suspension through the budget reconciliation process — even with extra time to complete it. “There’s not going to be reconciliation,” he said.
Illinois Sen. Tammy Duckworth was among the Democrats who characterized the McConnell offer as a “fold” on the part of the Senate GOP. “It’s great that he’s folded, and we’re going to move our agenda, and we’re going to take care of the debt ceiling, and then we’re going to go on and pass infrastructure,” she told reporters.
The decision by Senate Democrats to punt on the debt ceiling issue came as White House Press Secretary Jen Psaki said the Biden administration would prefer to avoid a short-term measure. “We don’t need to kick the can. We don’t need to go through a cumbersome process,” Psaki said, although she did not rule out agreeing to such a deal as an alternative to default.
Sen. Christopher S. Murphy, D-Conn., who hours earlier had dismissed McConnell’s offer as a “terrible idea,” said using reconciliation to raise the debt limit would set a “horrendous” precedent.
“You have to hope that the debt ceiling comes up at a moment when you have a reconciliation available,” Murphy said, pointing to the limited times that the process can be used under budget law. “The bottom line is Republicans knew they were going to get blamed for this if they didn’t come to the table with a proposal that at least gets us to December. Hopefully, in December, they’ll realize that doing this three months at a time is not in their interest.”
But a short-term debt limit fix, the details of which were still being negotiated, could nonetheless calm jittery financial markets and de-escalate a political crisis in Washington. The government would be unable to pay all its bills after Oct. 18 unless the statutory debt ceiling is lifted, Treasury Secretary Janet L. Yellen has warned.
Democrats had been pushing legislation that would suspend the debt limit through Dec. 16, 2022. But McConnell’s offer called for raising the debt limit in the short term by a specific dollar amount, which Senate Finance ranking member Michael D. Crapo, R-Idaho, said could be about $300 billion.