Senate poised to stave off debt crisis

The Senate appeared poised to stave off a debt ceiling crisis of its own making on Wednesday after Democrats said they could accept a surprise offer from Senate Minority Leader Mitch McConnell (R-Ky.) to raise the debt limit for two months.

McConnell made the offer shortly before the Senate was prepared to hold another vote on extending the nation’s borrowing limit just more than a week before a possible debt default. Republicans had been set to reject the measure.

The vote was quickly canceled after Democrats emerged from a meeting saying they could agree to the McConnell offer.

“In terms of a temporary lifting of the debt ceiling, we view that as a victory, a temporary victory with more work to do,” Sen. Tammy Baldwin (D-Wis.) told CNN’s Jake Tapper after the meeting.

A key GOP centrist, Sen. Lisa Murkowski (Alaska), also embraced the proposal, saying it was “going to give us a way out of the woods, which is what we want.”

The game of debt ceiling chicken between McConnell and Democrats was beginning to fray nerves in financial worlds given the Oct. 18 deadline for action set by the Treasury Department.

The White House and Democrats had sought to put more pressure on McConnell, with President Biden for a second time in three days going to the cameras to urge the GOP to agree to raise the debt ceiling.

Democrats had also begun discussing a possible carve-out from the Senate filibuster to raise the debt ceiling and get around Republicans, though centrist Sen. Joe Manchin (D-W.Va.) before McConnell’s proposal had publicly signaled his opposition to that avenue.

The deal McConnell offered is unlikely to lead to any GOP votes for raising the debt ceiling, but it will also stop Republicans from blocking a suspension.

It would allow Democrats “to use normal procedures to pass an emergency debt limit extension at a fixed dollar amount to cover current spending levels to December,” per a statement from the Senate GOP leader.

This gives Democrats something they want: a way to avoid using the time-consuming and cumbersome budget reconciliation process to extend the nation’s borrowing authority.

But it will also require Democrats to say they are raising the debt limit by a specific dollar amount, something Republicans will undoubtedly use in campaign ads next year. And it sets up another debt ceiling fight after Thanksgiving.

Some Democrats greeted the proposal glumly at first. Sen. Mazie Hirono (D-Hawaii), asked her opinion of the offer, said, “Not much.”

“What kind of offer is that?” she added, calling it “bullshit.”

Yet many declared victory after a closed-door meeting just off the Senate floor where Senate Majority Leader Charles Schumer (D-N.Y.) worked to convince his fellow Democrats that it was the best way forward.

Baldwin argued that the deal will allow Democrats to avoid wasting weeks of floor time on raising the debt ceiling under the reconciliation process when they would prefer to be working on a reconciliation package to implement President Biden’s $3.5 trillion Build Back Better agenda.

“I believe that Mitch McConnell is trying to steer [us] into this reconciliation process because it takes us away from the main Biden Build Back Better agenda,” she said. “We intend to take this temporary victory and then try to work with the Republicans to do this on a longer-term basis.”

“McConnell caved,” Sen. Elizabeth Warren (D-Mass.) declared after the caucus meeting. “And now we’re going to spend our time doing child care, health care and fighting climate change.”

Some Democrats made the argument that by agreeing to the deal, McConnell will be under pressure to again use regular order to raise the debt ceiling in November instead, and have less of a rationale to force Democrats to use budget reconciliation to allow the nation to take on more debt.

“We’ve made it clear we’re not using budget reconciliation, period,” said one Democratic senator who requested anonymity to comment on the deal. “The question for McConnell is, if you’re OK with allowing the Democrats to raise the debt ceiling for a couple months, why would you put the U.S. economy in continued jeopardy” by forcing another showdown in December.

McConnell in his statement said that while he would allow Democrats to use regular procedures to raise the debt ceiling high enough to cover federal spending until December, he’s not dropping his demand they use the time-consuming reconciliation process to raise it any higher.

He said the deal “will moot Democrats’ excuses about the time crunch they created and give the unified Democratic government more than enough time to pass standalone debt limit legislation through reconciliation.”

Other Senate Republicans sounded happy with the short-term fix after hearing about it, knowing they will still have leverage over the Democrats later this year and will be able to run campaign ads next year on vulnerable Democrats voting for a bigger overall debt number.

The deal means vulnerable Democrats such as Sens. Maggie Hassan (D-N.H.) and Mark Kelly (D-Ariz.) will have to vote to raise the debt ceiling to a specific number and not just vote to suspend the debt limit until a later date, such as after the 2022 midterm elections.

One of the few critics on the GOP side was former President Trump, who issued a statement blasting McConnell for not taking an even harder line, even though doing so could have provoked a financial crisis.

“Looks like Mitch McConnell is folding to the Democrats again. He’s got all of the cards with the debt ceiling, it’s time to play the hand. Don’t let them destroy our Country!” Trump fumed in a statement.