While he continued to blame Democrats, his offer will also allow Republicans to avoid the condemnation they would have received from some quarters if a financial crisis were to occur.Īt a White House event with top business leaders, Biden had shamed Republican senators for threatening to filibuster any suspension of the $28.4tn cap on the government’s borrowing authority. However, he said Republicans were willing to “assist in expediting” that process, and in the meantime Democrats may use the normal legislative process to pass a short-term debt limit extension with a fixed dollar amount to cover current spending levels into December. McConnell said in his offer on Wednesday that Republicans would still insist that Democrats use the reconciliation process for a long-term debt limit extension.
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McConnell and Senate Republicans have insisted that Democrats will have to go it alone to raise the debt ceiling and allow the treasury to renew its borrowing so that the country can meet its financial obligations.įurther, McConnell has insisted that Democrats use the same cumbersome legislative process, called reconciliation, that they used to pass a $1.9tn Covid-19 relief bill and have been employing to try to pass Biden’s $3.5tn measure to boost safety net, health and environmental programs. 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.Ĭongress had just days to act before the 18 October deadline, when the treasury department had warned it would quickly run short of funds to handle the country’s already accrued debt load. This is about paying the debt that both parties have already incurred.” She added: “It gives us some breathing room from the catastrophic default we were approaching because of Senator McConnell’s decision to play politics with our economy … this should have never been a political game from the start … addressing the debt limit shouldn’t be a partisan football. The principal deputy press secretary, Karine Jean-Pierre, told reporters on Air Force One en route to Chicago with the president that it was “a positive step forward”. The S&P 500 rose 1.5% by midday, and the Nasdaq composite, with a heavy weighting of technology stocks, rose 1.8%.Įarlier, the White House indicated the Biden administration was relieved if underwhelmed by the temporary fix.
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Wall Street continued to rally on the news. McConnell made the offer a day earlier, just before Republicans were prepared to block longer-term legislation to suspend the debt limit and as Joe Biden and business leaders voiced their concerns that a default would disrupt government payments to millions of people and throw the country into recession.