Default crisis dodged with debt agreement
Senate accord extends government’s borrowing authority to December
– Senate leaders announced an agreement Thursday to extend the government’s borrowing authority to December, temporarily averting an unprecedented federal default that experts say would have devastated the economy.
“Our hope is to get this done as soon as today,” Senate Majority Leader Chuck Schumer declared as he opened the Senate.
Republican and Democratic leaders edged back from a perilous standoff over lifting the nation’s borrowing cap, with Democratic senators accepting an offer from Senate GOP leader Mitch Mcconnell.
Mcconnell made the offer a day earlier just before Republicans were prepared to block longer-term legislation to suspend the debt limit and as President Joe Biden and business leaders ramped up their concerns that a default would disrupt government payments to millions of people and throw the nation into recession.
The Senate leaders had worked into the night hammering out the details.
“The Senate is moving forward,” Mcconnell said Thursday.
Wall Street continued to rally on the news. The S&P 500 rose 1.5% by midday, and the Nasdaq composite, with a heavy weighting of technology stocks, rose 1.8%.
The agreement sets the stage for a sequel of sorts in December, when Congress will again face pressing deadlines to fund the government and raise the debt limit before heading home for the holidays.
The agreement will allow for raising the debt ceiling by about $480 billion, according to a Senate aide familiar with the negotiations who spoke on condition of anonymity. That’s the level that the Treasury Department has said is needed to get to Dec. 3.
“Basically, I’m glad that Mitch Mcconnell finally saw the light,” Bernie Sanders, the independent senator from Vermont, said Wednesday. 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.
Sen. Chris Murphy, D-conn., added that, assuming final details in the EMERWASHINGTON gency legislation are in order, “for the next three months, we’ll continue to make it clear that we are ready to continue to vote to pay our bills and Republicans aren’t.” Mcconnell portrayed it differently. “The pathway our Democratic colleagues have accepted will spare the American people any near-term crisis, while definitively resolving the majority’s excuse that they lacked time to address the debt limit through (reconciliation),” Mcconnell said Thursday. “Now there will be no question: They’ll have plenty of time.”
Congress has just days to act before the Oct. 18 deadline when the Treasury Department has warned it would run short of funds to handle the nation’s already accrued debt load.
Mcconnell and Senate Republicans have insisted that Democrats would have to go it alone to raise the debt ceiling and allow the Treasury to renew its borrowing so that the country could meet its financial obligations. Further, Mcconnell has insisted that Democrats use the same cumbersome legislative process called reconciliation that they used to pass a $1.9 trillion COVID-19 relief bill and have been employing to try to pass Biden’s $3.5 trillion measure.