Washington – Republican and Democratic leaders walk away from a dangerous dispute over raising U.S. borrowing limits on Wednesday, and Democratic senators allow an urgent extension until December. Republican Leader Mitch McConnell has signaled he has accepted Cornell’s offer.
McConnell made a proposal shortly before Republicans were ready to block a bill to suspend debt restrictions until December of next year, with millions of unprecedented federal defaults from President Joe Biden and business leaders. A nation in recession, disrupting government payments to people.
The new deal sets the stage for a sequel in December, when Congress faces a looming deadline to re-fund the government and raise debt limits before going back on vacation.
The procedural vote for a longer extension that Republicans were trying to block was suddenly delayed Wednesday night, and the Senate resigned to allow lawmakers to discuss next steps. Democrats have come out of meetings more optimistic that the crisis will be averted.
“Fundamentally, I’m happy that Mitch McConnell has finally seen the light,” said Senator Bernie Sanders, an independent senator from Vermont. “We have finally done the right thing,” said one Republican. “At least we have at least two more months to get a permanent solution. “
Democratic Senator Chris Murphy added that, assuming the final details of emergency legislation are in place: Bill and Republicans are not. “
Unsurprisingly, McConnell described it very differently.
“This will invalidate the Democratic apology for the lack of time and give the unified Democratic government enough time to pass independent debt restriction law through regulation,” he said. ..
Congress has just days to act before the Oct. 18 deadline, as the Treasury warned the country would soon run out of funds to meet the burden of its already incurred debt.
McConnell and the Senate Republican Party argued that the Democratic Party alone should raise its debt ceiling and allow the Treasury to renew its debt so the country can meet its financial obligations.
Additionally, McConnell passed a Democrats’ $ 1.9 trillion COVID bailout bill using a tedious legislative process called regulation, passing Biden’s $ 3.5 trillion measures and a safety net program. , health and environment. Claimed to be trying to strengthen himself.
McConnell said in his offer Wednesday that Republicans would still insist Democrats use the settlement process to extend long-term debt limits. However, Republicans are prepared to “help promote” the process, while Democrats can use the normal legislative process to pass short-term debt limit extensions, he said.
While he continues to blame Democrats, his offer will also allow Republicans to avoid the blame they would have received from multiple sides for causing the financial crisis.
Last Wednesday, Biden said that as the deadline approached, there was a risk of historic defaults like a “meteor” that could crush economic and financial markets, and major companies to push for an immediate suspension. debt restrictions. I asked the chef.
At a White House event, the president embarrassed Republican senators for threatening to obstruct the government’s $ 28.4 trillion cap on borrowing authorities. He is dedicated to the credibility of Corporate America (a group that has traditionally worked with the GOP on tax and regulatory matters), as Citi executives, JPMorgan Chase and Nasdaq meet in person and effectively declare the debt. low. You must lift the restrictions.
“It is not fair and dangerous,” Biden said of resistance from Republicans in the Senate.
His move went down in history that the Democratic Party could try to change Senate obstruction rules to avoid Republicans. However, Senator Joe Manchin (DW.V.) repeatedly opposed such changes on Wednesday, possibly removing him from the Democratic table.
Business leaders reiterated Biden’s claim that the standoff had to end as soon as possible, but in doing so, they avoided tensions between the parties. Everyone has described the debt restrictions as avoidable crises.
Citi CEO Jane Fraser said, “We are now playing with fire, in short. Our country has suffered enormously in recent years. The human and economic costs of a pandemic are in dire straits. And we don’t need the disaster that we made ourselves. “
Adena Friedman, CEO of the Nasdaq Stock Exchange, said financial markets have yet to fully register the drama in Washington, but there are signs of instability.
Stock prices rose after McConnell’s offer was announced.
Ahead of the White House meeting, the administration warned that if the borrowing limit was not extended, it could cause an international financial crisis that the United States may not be able to control.
“Defects are likely to shock global financial markets, freeze global credit markets and plunge stock markets,” the Whitehouse Economic Advisory Board said in a new report. “Employers around the world will likely have to start laying off workers. “
The recession that could be triggered could be worse than the financial crisis of 2008, as many countries are still suffering from the COVID-19 pandemic, according to the report. It was first acquired by the New York Times.
To avoid deadlocks in the Senate, Biden said Democrats on Tuesday were considering changing Senate rules.
“It’s a real possibility,” Biden told reporters outside the White House.
But Manchin, who has withstood months of pressure from liberal activists to change obstructions so Democrats can push forward legislation on other issues such as voting rights, appeared to be stuck. ..
“I think it was very clear,” Manchin told reporters. “Nothing changes.” He pleaded with Senate Leader Chuck Schumer and Republican Leader McConnell to work together to resolve the impasse.
Removing the filibuster rule lowers the normal 60 vote threshold to 50. The Senate’s 50-50 split allows Vice President Kamala Harris to break the tie and Democrats to overtake Republicans. However, all Democratic senators must be involved for the rule change to be successful.
Once a routine problem, raising debt limits has come under political threat over the past decade, particularly by Republicans to counter rising government spending and the debt burden.
AP Business Writer Stan Choe contributed from New York.
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