Posted on Wednesday October 6, 2021 | 13:21
Updated 24 minutes ago
WASHINGTON (AP) – Republican Senate Leader Mitch McConnell told Democrats on Wednesday he would allow an emergency extension of the debt limit until December, pulling himself out of a perilous deadlock by offering a path potential to avoid a federal default.
A procedural vote on legislation that would suspend the debt limit for two years was abruptly delayed and the Senate suspended so lawmakers could discuss next steps.
“It will take away the Democrats’ apologies for the time crunch they have created and give the United Democratic government more than enough time to pass stand-alone debt-limiting legislation through reconciliation,” McConnell said.
It will also allow Republicans to avoid the blame they would have received from some for blocking a vote on the longer extension.
Earlier Wednesday, President Joe Biden called on top business leaders to push for the immediate suspension of the debt ceiling, saying the approach of the October 18 deadline created the risk of a historic default that would look like a “meteor” that could crush the economy and financial markets.
At a White House event, the president shamed Republican senators for threatening to obstruct any suspension of the $ 28.4 trillion cap on the government’s borrowing power. He relied on the credibility of U.S. companies – a group that has traditionally aligned with the GOP on tax and regulatory matters – to make his point as Citi chiefs JP Morgan Chase and Nasdaq stand together. come together in person and virtually to say the debt limit must be lifted.
“It is not fair and it is dangerous,” Biden said of resistance from Republicans in the Senate. “So let’s end this mess and vote today.”
His measures came amid discussions that Democrats may try to change Senate filibuster rules to bypass Republicans. But Senator Joe Manchin, DW.V., reiterated his opposition to such a change on Wednesday, likely removing him from the Democratic table.
Business leaders echoed Biden’s points about the need to end the impasse as soon as possible, although they avoided partisan tensions by doing so. Everyone has described the debt limit as a preventable crisis.
“We just can’t wait until the last minute to fix this problem,” said Jane Fraser, CEO of Citi Bank. “We’re just playing with fire right now, and our country has suffered so much over the past few years. The human and economic cost of the pandemic has been heartbreaking, and we don’t need a disaster of our own. ”
Financial markets have yet to fully register the drama in Washington, although there are signs they are getting nervous, said Adena Friedman, CEO of the Nasdaq Stock Exchange.
Stock prices rose after the publication of McConnell’s offer.
Ahead of the White House meeting, the administration warned that if the borrowing limit was not extended, it could trigger an international financial crisis that the United States may not be able to handle.
“A default would send shockwaves through global financial markets and likely cause credit markets around the world to freeze and stock markets to fall,” the White House Council of Economic Advisers said in a new report. “Employers around the world should probably start laying off workers. “
The recession that could be triggered could be worse than the financial crisis of 2008, as it would come while many countries are still grappling with the COVID-19 pandemic, according to the report. It was first obtained by The New York Times.
Congress has just days to act before the Oct. 18 deadline, when the Treasury Department warned it would quickly run out of funds to deal with the country’s already accumulated debt.
The Senate, meanwhile, was due to vote Wednesday on whether to pass a bill to suspend the debt ceiling. The Republicans were again expected to block it. To get around the GOP deadlock, Biden said in improvised comments Tuesday that Democrats were considering changing Senate rules.
“It’s a real possibility,” Biden told reporters outside the White House.
But Manchin, who for months resisted pressure from liberal activists to change the filibuster so Democrats could push forward legislation on other issues such as voting rights, did not appear moved.
“I think I was very clear,” Manchin told reporters. “Nothing changes.” He implored Senate Majority Leader Chuck Schumer and GOP Leader Mitch McConnell to work together to resolve the impasse.
Getting rid of the filibuster rule would lower the typical 60-vote threshold for the move to 50. In the 50-50 split Senate, Vice President Kamala Harris can break the tie, allowing Democrats to break the tie. republicans. But to be successful in changing the rules, all Democratic senators would have to be on board.
At his weekly press conference, Schumer did not embrace – or dismiss – the idea of changing the filibuster for this specific problem.
Instead, Schumer simply reiterated what he, Biden, and others have said – that Republicans should “step back” and allow Democrats to pass the debt measure that has already been approved and sent by the government. Bedroom. He said the burden is on McConnell’s shoulders.
McConnell, however, wants to force Democrats to use the process he favors, which gives Republicans enough time to remind voters of the unpopular vote. He has sought to portray Democrats as confrontational, while insisting they play by his rules.
Once a routine affair, raising the debt ceiling has become politically treacherous over the past decade or more, used by Republicans in particular to denounce government spending and rising debt burdens.
Both sides have contributed to the debt, and the country has been in deficit most years for decades.
The filibuster has been the subject of debate throughout the year, as Biden and his allies consider ways to bypass GOP opposition to much of his agenda.
Biden has not supported previous calls to end the filibuster on other matters, namely changes to the voting law. But Tuesday’s comments could signal a new phase.