Showdown Over The Debt: Senate Approves Extension To Borrowing Limit

UPDATED, 5:07 PM: The Senate voted along party lines to raise the debt ceiling through Dec. 3.

Their vote, 50-48, temporarily averts the threat that the U.S. could default on its debt, as Democratic and Republican leaders had a standoff over who bears responsibility for raising the borrowing limit.

After insisting that Democrats go through a lengthy process called reconciliation to raise the debt ceiling, Senate Minority Leader Mitch McConnell offered an alternative on Wednesday: a short term fix, essentially kicking the can down the road two months. McConnell and 10 other Republicans joined with Democrats on a procedural vote to bring the extension to the floor, but he and other GOP members still voted against raising the debt ceiling in the final vote.

“This is a temporary but important fix,” Senate Majority Leader Chuck Schumer said from the floor before the final vote, as he blasted Republicans for playing “a dangerous and risky partisan game, and I am glad their brinksmanship did not work.” Some Republicans complained of the timing of Schumer’s remarks, and Sen. Joe Manchin (D-WV) reportedly called them “inappropriate” given the wrangling to get to a point where the debt ceiling extension could be passed.

Schumer has warned of economic catastrophe if the limit was not raised. Treasury Secretary Janet Yellen had said that the U.S. risked being unable to meet its obligations after Oct. 18.

Still, even though McConnell offered only a short-term solution, some Republicans accused him of caving to Democrats. “In the game of chicken, Chuck Schumer won this game of chicken,” said Sen. Ted Cruz (R-Texas), who voted against the procedural vote.

The extension now goes to the House. The White House said that President Joe Biden plans to sign it.

PREVIOUSLY: Senate Majority Leader Chuck Schumer said that an agreement has been reached with Republicans for a short-term extension of the debt ceiling through December.

“It is our hope that we can get this done as soon as today,” Schumer said on the floor of the Senate.

Under the terms of the agreement, the debt limit will be increased by $480 billion. Although no date is specified in the legislative language, lawmakers indicated that the finding would last for about two more months.

The standoff has been one about process. Senate Minority Leader Mitch McConnell has insisted that Democrats go it alone on raising the debt ceiling and through a legislative process called reconciliation, requiring just a simple majority vote. Schumer has said that Democrats were willing to pass much more quickly and simply via a standalone bill. But Republicans have vowed to block such a plan by using the 60-vote threshold threat of a filibuster.

McConnell said on the floor, “The pathway our Democratic colleagues have accepted will spare the American people any near-term crisis, while definitively resolving the majority’s excuse that they lacked time to address the debt limit through the 304 reconciliation process. Now there will be no question: They’ll have plenty of time.”

PREVIOUSLY: Senate Democrats coming out of a caucus meeting expressed support for an extension of the debt ceiling through December, albeit it may only be a temporary resolution of a situation that risks a U.S. government default.

Sen. Mazie Hirono (D-HI) told reporters that it would still be a short-term fix, as Democratic lawmakers still oppose raising the debt limit in the long term via a process known as reconciliation.

Sen. Dick Durbin (D-IL) said that they were still awaiting official language from Minority Leader Mitch McConnell’s proposal for the short term extension. “Wait and see,” he told reporters.

The White House was a bit more skeptical of a short-term extension. The Senate was to take up a standalone bill for longer-term extension of the debt ceiling, but Republicans vowed to block it.

“We don’t need to kick the can. We don’t need to go through a cumbersome process that every day brings additional risks,” said White House Press Secretary Jen Psaki.

PREVIOUSLY: As the White House gathered CEOs to underscore the dire situation if the U.S. were to default on its debts, Republicans on Wednesday floated a new offer to Democrats as a way to resolve in the short term a party stand-off over the debt limit.

Senate Minority Leader Mitch McConnell (R-KY) proposed a short-term extension of the limit at a fixed dollar amount, a measure that would cover the nation’s debt through December. What’s unclear is whether Democrats will accept the proposal. Sen. Dick Durbin (D-IL), the majority whip, was non-committal as he exited the chamber following a vote.

It’s the latest wrinkle in a showdown that has captivated D.C. media this week as yet another example of the deep partisan divisions that seemed to have only worsened since Joe Biden took office. Senate Majority Leader Chuck Schumer has blasted Republicans for playing politics with the nation’s credit-worthiness.

Treasury Secretary Janet Yellen has warned of the consequences of not raising the debt limit by October 18, as the U.S. would enter a scenario in which it could not pay its debt obligations, something that has never happened before.

As important as the situation is, the fight over the debt limit comes down to process.

McConnell had so far refused to go along with a stand-alone, longer-term debt limit increase, holding the threat of a filibuster that requires a 60-vote threshold for such a measure to make it to the floor.

Instead, McConnell has been insistent that Democrats raise the debt limit through a process known as reconciliation, something that would require only a majority vote. But it would likely mean that a dollar amount would have to be attached to the debt increase, something that Democrats fear would be used against them in next year’s midterm elections.

At the White House, Biden gathered a group of CEOs, telling them, “Our Republican friends need to stop playing Russian-roulette with the U.S. economy.” Among those at the meeting were JP Morgan Chase CEO Jamie Dimon, Bank of America CEO Brian Moynihan and Citi CEO Jane Fraser.

Republicans, though, want to send a message about the debt limit, linking it to Biden’s social spending proposals, the latter of which they regard as reckless. That legislation, with a cost of about $3.5 trillion, applies to future spending, while lifting the debt limit is required to pay off existing government outlays.