Mitch McConnell offered a deal to Democrats regarding the debt ceiling.

U.S. Senate Republican Leader Mitch McConnell (R-KY) walks through the Ohio Clock Corridor outside the Senate chamber at the U.S. Capitol in Washington, U.S., October 6, 2021. REUTERS/Leah Millis

Ben Burke Producer

Politics

UPDATE: Debt ceiling deal passes in Senate as Biden floats filibuster rules change

Oct 06, 2021

Ben Burke Producer

By Ben Burke (Producer)

Update (10/8/21): The Senate approved a debt ceiling deal in a late Thursday night vote. The 50-48 vote paves the way for Congress to raise the government’s debt ceiling by nearly a half-trillion dollars. The bill’s expected passing in the House would only hold off a potential default until December, setting up another showdown before the year’s end.

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Update (10/7/21): Senate Majority Leader Chuck Schumer announced Thursday the Democrats have accepted a debt ceiling deal to extend the government’s borrowing authority into December.

Senate Minority Leader Mitch McConnell offered the deal Wednesday afternoon, and Senate leaders worked late into the night working out the details to the deal.

“Our hope is to get this done as soon as today,” Schumer declared Thursday. “The Senate is moving forward,” McConnell added.

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Original Story (10/6/21): Senate Minority Leader Mitch McConnell offered a deal to Democrats regarding the debt ceiling Wednesday. The deal would involve an emergency debt ceiling extension into December.

“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,” McConnell said.

The Senate was expected to vote on whether to take up a bill to suspend the debt ceiling before the deal was offered. However, that vote was abruptly delayed.

With less than two weeks until the Treasury Department said it would have been left “with very limited resources that would be depleted quickly”, Democratic senators had been discussing a range of options regarding a debt ceiling vote. This includes getting rid of the filibuster.

“It’s a real possibility,” President Joe Biden told reporters outside the White House.

In order to invoke a filibuster rules change for the debt ceiling vote, all Democratic senators would need to be on board. However, Sens. Joe Manchin and Kyrsten Sinema have raised objections to ending the filibuster on other topics this year. Sen. Manchin sounded resistant on the idea Tuesday.

Wednesday’s expected vote would have come on the same day the White House Council of Economic Advisers released a report on what would happen if the U.S. did not make a deal on the debt ceiling.

“A default would fundamentally hinder the Federal government from serving the American people,” the council wrote in its report.

According to the council, not only would basic government functions be hindered if there is was successful debt ceiling vote, but “payments from the Federal government that families rely on to make ends meet would be endangered”.

People affected could include:

Social Security recipients
Medicare/Medicaid recipients
Children’s Health Insurance Program participants
Veterans’ programs participants
Supplemental Nutrition Assistance Program participants
Child tax credit recipients
Housing assistance recipients
Student financial aid recipients
School lunch program participants

On the same day as the offered debt ceiling deal, President Biden met with business leaders at the White House. The video above shows clips from the meeting, which included the heads of banks like Citi, JP Morgan Chase and Bank of America.

“The effects would be cascading, so day one would be bad, but the cascading effects in the ensuing weeks could go anywhere from a recession to a complete catastrophe for the global economy,” JPMorgan Chase CEO Jamie Dimon said. “I don’t know why anyone would take a chance like that.”

Tags: Joe Biden

Joe Biden, U.S. President: “What does it mean for the small businesses and everyday people if we renege on the debt?”

3. SOUNDBITE (English) Jane Fraser, CEO, Citigroup: “We need to resolve this issue very quickly. Every day of delay right now comes at an increasing price, as we’ve begun to see in the markets already starting last Friday. America simply cannot default on the debt because the US Treasury market is the bedrock of our financial system domestically and globally, and defaulting is going to cause lasting damage to the credibility of the United States with investors and in financial markets around the world.”

5. SOUNDBITE (English) Jamie Dimon, CEO, JPMorgan Chase: “An actual default, an actual default, would be unprecedented. We, the things we know that it would do are very bad and it could be potentially far worse. The effects would be cascading, so day one would be bad, but the cascading effects in the ensuing weeks could go anywhere from a recession to a complete catastrophe for the global economy, and I don’t know why anyone would take a chance like that. And number five, America’s role in the world is essential. We are the bedrock, the American Treasury is the bedrock, our credibility, we’re being watched right now by our allies and unfortunately, our enemies. Our credibility is obviously essential. Trust in America and the US dollar and the financial system is critical to the world economy and eventually actually world peace. So this is a time I think we should show American competence, not American incompetence.”

7. SOUNDBITE (English) Janet Yellen, U.S. Treasury Secretary:

“This is an urgent matter. It must be resolved immediately. Treasury will exhaust its extraordinary measures if Congress has not acted to raise or suspend the debt limit by October 18th. After that point, we expect Treasury would be left with very limited cash that would be depleted quickly. And as we’ve seen in the past, and as this group knows, even delaying action can cause harm to business and consumer confidence, raise borrowing costs, disrupt financial markets and cause a downgrade of the US credit rating.”

“If Congress does not take action to raise the debt limit, Treasury’s cash balance will reach an insufficient level to pay the nation’s bills, and America would default for the first time in history, and default will call into question the full faith and credit of the United States. Our country would likely face a financial crisis, causing interest rates to rise quickly and restricting access to credit. Our fragile recovery would be thrown into reverse. We would likely experience a recession. Millions of jobs would be lost and the pain would endure well past the resolution of the crisis.”