NATIONAL NEWS

Agreement on short-term debt ceiling fix, averting crisis

Oct 7, 2021, 9:09 AM
Senate Majority Leader Chuck Schumer (D-NY) speaks on the phone as he arrives on Capitol Hill on Oc...
Senate Majority Leader Chuck Schumer (D-NY) speaks on the phone as he arrives on Capitol Hill on October 06, 2021 in Washington, DC. Congress has until October 18 to raise the debt ceiling or risk default that would have widespread economic consequences. (Photo by Anna Moneymaker/Getty Images)
(Photo by Anna Moneymaker/Getty Images)

WASHINGTON (AP) — Senate Majority Leader Chuck Schumer said Thursday an agreement has been reached with Republicans to extend the government’s borrowing authority into December, temporarily averting a debt crisis.

“Our hope is to get this done as soon as today,” Schumer declared as he opened the Senate.

In their agreement, Republican and Democratic leaders edged back from a perilous standoff over lifting the nation’s borrowing cap, with Democratic senators accepting an offer from Senate GOP leader Mitch McConnell.

McConnell made the offer Wednesday shortly before Republicans were prepared to block longer-term legislation to suspend the debt limit and as President Joe Biden and business leaders ramped up their concerns that an unprecedented federal default would disrupt government payments to millions of people and throw the nation into recession.

The Senate leaders worked late into the night hammering out the details.

“The Senate is moving forward,” McConnell said Thursday.

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.

“Basically, I’m glad that Mitch McConnell finally saw the light,” said Bernie Sanders, the independent senator from Vermont. The Republicans “have finally done the right thing and at least we now have another couple months in order to get a permanent solution.”

Sen. Chris Murphy, D-Conn., added that, assuming final details in the emergency legislation are in order, “for the next three months, we’ll continue to make it clear that we are ready to continue to vote to pay our bills and Republicans aren’t.”

Unsurprisingly, McConnell portrayed it very differently.

“This 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,” he said.

Congress has just days to act before the Oct. 18 deadline when the Treasury Department has warned it would quickly run short of funds to handle the nation’s already accrued debt load.

McConnell and Senate Republicans have insisted that Democrats would have to go it alone to raise the debt ceiling and allow the Treasury to renew its borrowing so that the country could meet its financial obligations. Further, McConnell has insisted that Democrats use the same cumbersome legislative process called reconciliation that they used to pass a $1.9 trillion COVID-19 relief bill and have been employing to try to pass Biden’s $3.5 trillion measure to boost safety net, health and environmental programs.

McConnell said in his offer Wednesday that Republicans would still insist that Democrats use the reconciliation process for a long-term debt limit extension. However, he said Republicans are 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.

While he continued to blame Democrats, his offer will also allow Republicans to avoid the condemnation they would have gotten from some quarters if a financial crisis were to occur.

Earlier Wednesday, Biden enlisted top business leaders to push for immediately suspending the debt limit, saying the approaching deadline created the risk of a historic default that would be like a “meteor” that could crush the economy and financial markets.

At a White House event, the president shamed Republican senators for threatening to filibuster any suspension of the $28.4 trillion cap on the government’s borrowing authority. He leaned into the credibility of corporate America — a group that has traditionally been aligned with the GOP on tax and regulatory issues — to drive home his point as the heads of Citi, JP Morgan Chase and Nasdaq gathered in person and virtually to say the debt limit must be lifted.

“It’s not right and it’s dangerous,” Biden said of the resistance by Senate Republicans.

His moves came amid talk that Democrats might try to change Senate filibuster rules to get around Republicans. But Sen. Joe Manchin, D-W.Va., reiterated his opposition to such a change Wednesday, likely taking it off the table for Democrats.

The business leaders echoed Biden’s points about needing to end the stalemate as soon as possible, though they sidestepped the partisan tensions in doing so. Each portrayed the debt limit as an avoidable crisis.

“We just can’t wait to the last minute to resolve this,” said Jane Fraser, CEO of the bank Citi. “We are, simply put, playing with fire right now, and our country has suffered so greatly over the last few years. The human and the economic cost of the pandemic has been wrenching, and we don’t need a catastrophe of our own making.”

Ahead of the White House meeting, the administration warned that if the borrowing limit isn’t extended, it could set off an international financial crisis the United States might not be able to manage.

“A default would send shock waves through global financial markets and would likely cause credit markets worldwide to freeze up and stock markets to plunge,” the White House Council of Economic Advisers said in a new report. “Employers around the world would likely have to begin laying off workers.”

The recession that could be triggered could be worse than the 2008 financial crisis because it would come as many nations are still struggling with the COVID-19 pandemic, the report said.

Once a routine matter, raising the debt limit has become politically treacherous over the past decade or more, used by Republicans, in particular, to rail against government spending and the rising debt load.

___

AP Business Writer Stan Choe in New York contributed to this report.

KSL 5 TV Live

Top Stories

National News

Bodycam video released by authorities shows the good Samaritan trying to help the man on the tracks...
Tavleen Tarrant, CNN

Good Samaritan, NYPD officers rescue man from subway tracks moments before train arrives

A good Samaritan, who was at the right place at the right time, and a team of New York City officers who rushed on scene rescued a man who fell on the subway tracks just seconds before an incoming train arrived, police said.
1 day ago
"White Christmas" is a movie that has a lot of behind-the-scenes lore. (Paramount/Kobal/Shutterstoc...
AJ Willingham, CNN

The secrets behind your favorite Christmas movie classics

Watching Christmas movies is a whole tradition unto itself. Get to know some of the fascinating stories behind the stories so you can watch your old favorites with fresh eyes.
1 day ago
A memorial is seen at the site of a fatal shooting in a Walmart on November 23, 2022 in Chesapeake,...
Ben Finley and and Matthew Barakat, Associated Press

Walmart shooter left ‘death note,’ bought gun day of killing

Authorities investigating the fatal shootings of six people at a Walmart said that the shooter bought the gun just hours before and left a note with grievances against coworkers on his phone.
1 day ago
A Ford sign sits outside of a dealership on January 25, 2022 in Chicago, Illinois. Ford Motor Co. a...
Associated Press

Ford recalls over 634K SUVs due to fuel leaks and fire risk

Ford is recalling over 634,000 SUVs worldwide because a cracked fuel injector can spill fuel or leak vapors onto a hot engine and cause fires.
1 day ago
The Twitter headquarters signage as seen on 10th Street on November 4, 2022 in San Francisco, Calif...
Kelvin Chan, AP Business Writer

Musk plans to relaunch Twitter premium service, again

Elon Musk says that Twitter plans to relaunch its premium service that will offer different colored check marks to accounts next week.
1 day ago
Discount signs are displayed on products at a Macy's store during Black Friday on November 25, 2022...
Anne D'Innocenzio, AP Retail Writer

Inflation hovers over shoppers heading into Black Friday

Black Friday marks a return to familiar holiday shopping patterns, but inflation is weighing on consumers.
1 day ago

Sponsored Articles

house with for rent sign posted...
Chase Harrington, president and COO of Entrata

Top 5 reasons you may want to consider apartment life over owning a home

There are many benefits of renting that can be overshadowed by the allure of buying a home. Here are five reasons why renting might be right for you.
Festive kitchen in Christmas decorations. Christmas dining room....
Lighting Design

6 Holiday Decor Trends to Try in 2022

We've rounded out the top 6 holiday decor trends for 2022 so you can be ahead of the game before you start shopping. 
Happy diverse college or university students are having fun on their graduation day...
BYU MBA at the Marriott School of Business

How to choose what MBA program is right for you: Take this quiz before you apply!

Wondering what MBA program is right for you? Take this quiz before you apply to see if it will help you meet your goals.
Diverse Group of Energetic Professionals Team Meeting in Modern Office: Brainstorming IT Programmer...
Les Olson

Don’t let a ransomware attack get you down | Protect your workplace today with cyber insurance

Business owners and operators should be on guard to protect their workplace. Cyber insurance can protect you from online attacks.
Hand turning a thermostat knob to increase savings by decreasing energy consumption. Composite imag...
Lighting Design

5 Lighting Tips to Save Energy and Money in Your Home

Advances in lighting technology make it easier to use smart features to cut costs. Read for tips to save energy by using different lighting strategies in your home.
Portrait of smiling practitioner with multi-ethnic senior people...
Summit Vista

How retirement communities help with healthy aging

There are many benefits that retirement communities contribute to healthy aging. Learn more about how it can enhance your life, or the life of your loved ones.
Agreement on short-term debt ceiling fix, averting crisis