Legislators attain settlement on rising the short-term debt ceiling, says Schumer
Senate Majority Leader Chuck Schumer announced Thursday morning that after hours of discussion with minority leader Mitch McConnell, lawmakers had reached an agreement on a short-term increase in the debt ceiling.
“I have good news,” said Schumer, DN.Y., from the Senate. “We agreed to extend the debt ceiling through early December and we hope we can do that today.”
According to those familiar with the deal, the deal allows the debt ceiling to be raised by $ 480 billion, a sum the Treasury Department estimates will allow bills to be paid by December 3rd. The current national debt is approximately $ 28.4 trillion and would be allowed to rise to approximately $ 28.8 trillion under the agreement.
Senate Minority Leader Charles Schumer (D-NY) (L) and Senate Majority Leader Mitch McConnell (R-KY) walk side by side into the Senate Chamber in the US Capitol February 7, 2018 in Washington, DC.
Chip Somodevilla | Getty Images
Investors seemed relieved that the US would stave off a default. Shares rose after the news. The Dow Jones Industrial Average ended Thursday’s session by more than 300 points, while the Nasdaq Composite added just over 1%.
The Senate Democrat’s announcement came less than a day after McConnell, R-Ky., Offered a stopgap solution to avert impending national bankruptcy and subsequent economic downturn.
Schumer said Thursday afternoon that the Senate will vote on the deal later that day as McConnell tried to get 10 members of their caucus together to join all 50 Democrats to get a final vote on the bill.
In recent weeks, the GOP has prevented the Democrats from passing an upper limit law in the 50-50 Senate by threatening filibusters.
Senate minority whip John Thune, Republican of South Dakota, told reporters he had a hard time convincing enough members to sign the short-term debt limit law: “In the end, we’ll be there, but it is– It will.” be a painful birthing process. “
Republicans and Democrats have been at odds for weeks on how to raise or suspend the U.S. credit limit until October 18, if the Treasury Department estimates the country will exhaust its emergency measures to clear the country’s bills.
The US has never defaulted on its debt, and most economists predict it would lead to a recession and sharp fluctuations in financial markets.
The Republicans, frustrated by what they saw as the reckless spending initiative of the Biden administration, threatened by Wednesday to repeal all debt ceiling laws submitted to the Senate as part of normal procedures.
Instead, the GOP had urged Democrats to pass a budget balancing solution that would deter Republicans from raising the nation’s credit limit.
McConnell made this clear when he presented his offer on Wednesday.
“We will also allow Democrats to use normal procedures to pass a fixed dollar emergency debt limit extension to meet current spending levels through December,” he wrote. “This will dispute the Democrats’ excuses about the shortage of time they have created and will give the united democratic government more than enough time to pass independent debt-limiting laws through reconciliation.”
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President Joe Biden spent much of his week categorizing Republicans as an obstacle and saying that their threat of filibusters complicates efforts to raise or suspend the debt ceiling.
The president called the GOP’s behavior “hypocritical, dangerous and shameful” on Monday, especially after it voted to suspend the debt ceiling several times during former President Donald Trump’s four-year tenure.
“Not only are Republicans refusing to do their job, they are threatening to use their power to prevent us from doing our job – and to save the economy from a catastrophic event,” Biden said at the time.
Still, the latest McConnell-Schumer deal is buying both parties less than two months before Congress will be forced to tackle the debt ceiling again.
The Democrats are in the middle of a tense inner-party debate about their billions in climate and poverty legislation, which they are trying to enforce with the help of a budget balance in the Senate. The reconciliation allows the party to bypass a filibuster and pass laws by a simple majority of 50 votes, less than the usual 60.
They are expected to draft a second reconciliation bill in the coming weeks to raise the debt ceiling to $ 30 trillion or more, which would allow the Treasury Department to pay out revenue beyond December 3rd.
The Democrats would also commit to lifting – rather than suspending – the credit ceiling through a reconciliation law. Suspensions allow the government to release new debt for a period of time rather than cap it to a specific dollar amount.
Politicians often prefer to sit out because it looks better ahead of the elections, a fact that may have contributed to the reluctance of the Biden government to pursue a law of reconciliation.
While both parties are responsible for the national debt, raising the limit will open up Democrats to attacking reckless, debt-financed spending through mid-2022.
Senator Lindsey Graham, a Republican from South Carolina, allegedly criticized McConnell’s offer on Thursday. Graham suggested that the deal should serve to ease pressure on two moderate Democratic senators, Kyrsten Sinema from Arizona and Joe Manchin from West Virginia, to remove the 60-vote threshold required to pass Senate bills is required.
Sinema and Manchin are currently the only two Senate Democrats who have publicly stated that they will not vote to abolish the filibuster rules. McConnell feared an impending default could have pushed them over the edge and led them to reverse their positions.
The abolition of the filibuster rules, sometimes referred to as the “nuclear option,” would open the floodgates to virtually any bill the Democrats wanted to pass because it would allow them to pass it with just 51 votes instead of the traditional 60 saying goodbye
– CNBC’s Ylan Mui contributed to this report.