Republican and Democratic leaders appeared to be moving toward a short-term deal for the U.S. government to avoid an unprecedented default on its debt.
Senate Minority Leader Mitch McConnell on Wednesday signaled a potential temporary fix to the deadlocked issue of raising the government's borrowing authority before Oct. 18, when the United States expects to run out of money to pay its bills.
In a statement, 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."
Senator Bernie Sanders, an independent who caucuses with the Democrats, welcomed McConnell’s move.
The Republicans “have finally done the right thing and at least we now have another couple months in order to get a permanent solution,” Sanders said.
McConnell had said Democrats, who control the Senate, should use the reconciliation process to address the debt limit.
Reconciliation is a parliamentary maneuver that allows certain budget-related legislation to pass with a simple majority, not 60 votes, in the Senate. Under reconciliation, the Democrats would not need any Republican votes.
"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 Wednesday. "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."
Senate Majority Leader Chuck Schumer has called reconciliation a “drawn-out, convoluted and risky process.”
Republicans have been saying since July they would not vote to raise the debt limit.
Biden solicits support from business leaders
Meanwhile, U.S. President Joe Biden met Wednesday with some of America’s top business leaders and banking executives to make the case that Congress must increase the government’s borrowing authority.
A default would risk millions of jobs and throw the United States into recession, “causing lasting harm to America’s economic strength by threatening the dollar’s status as the currency the world relies on and downgrading the U.S.’s credit rating,” the White House said.
Biden said raising the debt limit “is paying our old debts” and is not linked to his administration’s proposals for spending on infrastructure and social programs.
“The reason we have to raise the debt limit is, in part, because of the policies of the previous administration, which incurred nearly $8 trillion in bills in four years -- some of which Democrats voted for -- more than a quarter of all the debt now outstanding,” Biden said. “We had to raise the debt limit three times when Donald Trump was President. And the Republicans moved to raise it each time, and each time the Democrats supported the effort to raise the debt.”
Republicans object to joining Democrats in increasing it now because they are opposed to Biden’s plans to spend up to $3.5 trillion to greatly expand the country’s social safety net to provide more government aid for families, students and health care benefits for older Americans.
Democrats say they would fully pay for the extra spending with higher taxes on corporations and the wealthiest individuals, not add to the country’s long-term debt total.
The United States, virtually alone among world governments, imposes a debt ceiling, and has periodically increased it or suspended it for a year or two. It is tantamount to a credit card limit consumers might face, a curb on how much they can increase their debt and a requirement to pay off debts already incurred.
Coming too close to the borrowing limit has its perils. A debt ceiling dispute in 2011 which Congress resolved two days before the borrowing limit was reached caused stock prices to fall and the first credit downgrade for U.S. debt.
Some information for this report came from The Associated Press.