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Democrats and Republicans in the Senate remained on track Thursday to prevent a U.S. default this month, with Senate Majority Leader Chuck Schumer announcing that a vote on lifting the federal borrowing limit could happen later in the day.
“We have reached agreement to extend the debt ceiling through early December, and it’s our hope that we can get this done as soon as today,” the New York Democrat said in a brief floor speech.
The Senate is expected to lift the debt limit by $480 billion, allowing for federal borrowing until Dec. 3, when funding for the federal government is also due to end.
Democratic senators had signaled late Wednesday that their party was likely to accept an offer from Senate Minority Leader Mitch McConnell after the Kentucky Republican proposed a short-term lift to the debt limit.
In revealing his offer on Wednesday afternoon, McConnell said his party would let Senate Democrats “use normal procedures to pass an emergency debt limit extension at a fixed dollar amount to cover current spending levels into December.”
McConnell and other Republicans had argued for months that Democratic lawmakers ought to go it alone to lift the debt ceiling through a process known as budget reconciliation, as that’s how they passed a stimulus bill in March and how they’re working to pass their sweeping social-spending package.
Democrats had said again and again that the increase should happen through a standard process and criticized Republicans for preventing that, adding that acting through reconciliation would be slow and risky.
“The pathway our Democratic colleagues have accepted will spare the American people any near-term crisis by definitively resolving the majority’s excuse that they lacked the time to address the debt limit through the 304 reconciliation process,” McConnell said in a separate floor speech on Thursday morning.
“Now there’ll be no question — they’ll have plenty of time.”
DJIA,
rose Thursday, on track for a third day of gains, amid signs that the debt-ceiling issue in Washington will be resolved for at least two months and that relations with China may be thawing.
“This is a clear near-term market positive. Default was not really an option, but the brinkmanship of recent days threatened to intensify market concerns if an off-ramp was not found by the end of this week,” said Ed Mills, a Washington policy analyst at Raymond James, in a note.
Mills said this week’s deal “does not resolve the underlying issues that led to the latest standoff, but will place pressure on Democrats to complete their entire agenda (including raising the debt limit) before adjourning for the year in December.” He predicted the new “X Date” for the Treasury Department, meaning when it would lack the cash to meet all its financial obligations, would come in 2022’s first quarter, assuming officials have the ability to use extraordinary measures.
