Default crisis dodged — for now — with bipartisan debt accord

WASHINGTON — Senate leaders announced an agreement Thursday to extend the government’s borrowing authority into December, temporarily averting an unprecedented federal default that experts say would devastate the economy.

“Our hope is to get this done as soon as today,” Senate Majority Leader Chuck Schumer declared. Republican leader Mitch McConnell, whose party has been blocking the debt limit extension, said, “The Senate is moving forward.”

The first crucial vote on the measure was set for Thursday night.

Republican leaders were working to find the 10 votes they need from their party to advance the extension. John Thune of South Dakota, the second-ranking Senate Republican, said, “In the end we’ll be there, but it will be a painful birthing process.”

In their agreement, the Republican and Democratic leaders edged back from a perilous standoff over lifting the nation’s borrowing cap, with Democratic senators accepting an offer from McConnell.

McConnell made the GOP offer a day earlier, just before his 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 White House signaled the president’s support, with principal deputy press secretary Karine Jean-Pierre issuing a statement that the president would sign a bill to raise the debt limit when it passed Congress.

Earlier, she called the short-term deal a “positive step,” even as she assailed Republicans for blocking Democratic efforts.

“It gives us some breathing room from the catastrophic default we were approaching because of Sen. McConnell’s decision to play politics with our economy,” she told reporters.

Wall Street rallied modestly on the news.

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 to discuss them. That is 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 late Wednesday.

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 quickly run short of funds to handle the nation’s already accrued debt load.

McConnell and Senate Republicans have insisted that Democrats go it alone to raise the debt ceiling. 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 to boost safety net, health and environmental programs.

McConnell said in his offer Wednesday that Republicans would still insist that Democrats use the reconciliation process for a long-term debt limit extension. However, he said Republicans are willing to “assist in expediting” that process, and in the meantime Democrats may use the normal legislative process to pass a shortterm debt limit extension with a fixed dollar amount to cover current spending levels into December.