Congress set to avert crisis temporarily, but fundamental debt ceiling deadlock remains
Senate Majority Leader Chuck Schumer said Thursday morning that the Senate had reached an agreement on raising the debt limit, and a vote could come on Thursday to avert a potential economic crisis.
However, any agreement is likely to only postpone a bigger fight rather than fix the underlying impasse.
What numbers were Democrats and Republicans actually bargaining for to raise the debt limit. Democrats think the numbers Republicans are proposing will not cover the time period that minority leader Mitch McConnell, R-Ky., introduced in December. The current ballpark is an increase of $300 billion from $200 billion.
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If and when the Senate acts on a short-term extension proposed by McConnell, it would save the US from defaulting on its debt on October 18, which would lead to a major economic crisis. Treasury Secretary Janet Yellen predicted that such an outcome would lead to a recession.
But even if the crisis will be temporarily averted by McConnell’s olive branch, a debt crisis still remains in the relatively near future.
That’s because McConnell’s offer of a temporary debt limit extension was intended to “make excuses about the lack of time for Democrats to make excuses and give the unified Democratic government enough time to pass standalone debt ceiling legislation through legislation.” ”
Democrats must pass a debt ceiling bill through reconciliation has always been the stance of Republicans. So the temporary loan limit increase is an extension by Republicans for Democrats to meet their demands, not a compromise.
Meanwhile, Democrats are adamant that they will not pass the debt ceiling bill through reconciliation, even as Republicans give them more time.
Senate Majority Whip Dick Durbin, D-Ill., said he refused to use conciliation to raise the debt limit.
“If you project what’s going on every year, or whenever it’s due, it’s insane. It’s a long-term procedural mess. And it was never designed to have a loan limit. And I hope Senator McConnell will come to his senses,” Durbin said Thursday.
“We can be, it’s up to Senator McConnell,” Durbin said as Congress was caught in another debt ceiling game of chicken in just a few months.
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December is also when government funding runs out after an ongoing resolution passed by Congress last month. And Democrats will likely be under the gun to pass their massive reconciliation social spending bill and infrastructure bill if they haven’t already.
Throw in a loan expiration and things can get pretty chaotic in Washington, DC at Christmas time.
However, a possible relief is that if the Treasury reaches the debt limit again in December, it could resume “extraordinary measures” to protect the US from defaults for a few months, as it did When the suspension of the loan limit ended on July. 31.
This would make the actual date of February or March the US default, which means lawmakers could put off dealing with the issue until 2022.
Granthshala Business’ Jason Donner, Chad Pergram, Jackie Heinrich and Hilary Vaughan contributed to this report.