Update (1645ET): Congressional Democrats are considering Senate Minority Leader Mitch McConnell's offer of a short term debt limit hike a victory - with Sen. Chris Coons (D-DE) telling CNN that McConnell had 'blinked' and that Democrats would likely take him up on the offer to extend the ceiling until December.
"I think we'll end up raising the debt ceiling through December and it gives us the next three months, two months of this ... to focus on finishing the Build Back Better agenda," said Coons. "Mitch McConnell blinked and it allows us to spend from here until November focused on finalizing the Build Back Better plan.. So I think that's progress."
Still, Coons warned that Democrats would not increase the debt limit via reconciliation.
So basically Dems will agree to raise debt limit til December. And then figure out what to do in the interim— Manu Raju (@mkraju) October 6, 2021
They would need an agreement of all 100 senators to schedule a vote - otherwise Schumer would have to take procedural steps to break a filibuster
White House press secretary Jen Psaki, meanwhile, responded to McConnell's proposals - telling reporters "We could get this done today, we don't need to kick the can, we don't need to go through a cumbersome process that every day brings additional risks."
That said, as we noted earlier, Democrats may face a tougher environment once they need to raise the ceiling again.
While raising the debt ceiling just once is proving to be a challenge, the only thing worse would be having to vote to raise it twice
“From a political perspective, the only thing less attractive than voting to raise the debt limit to $31 trillion is voting to raise it to $29 trillion and then voting a second time to raise it to $31 trillion”
Upshot: Senate Democrats say theyll accept short-term increase of debt ceiling but will NOT use budget process for long-term hike. So they’ll be back fighting this by December. Schumer and McConnell now will scratch out the details— Manu Raju (@mkraju) October 6, 2021
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Update (1502ET): While Schumer and McConnell meet to discuss the latest offer from Republicans for a temporary debt-limit extension, Hawaii Rep. Mazie Hirono (D-HI) called the whole thing "bullshit."
Mazie Hirono describes the McConnell offer on the debt ceiling to reporters as “bullshit”— Ben Jacobs (@Bencjacobs) October 6, 2021
If she speaks for the rest of the Congressional Democrats, looks like today's machinations will go nowhere. Meanwhile the Senate is going to hold off on a procedural debt-limit vote, according to Sen. Richard Shelby (R-AL) as the two sides continue to negotiate a path forward.
Indeed https://t.co/SDSEkorU4z— zerohedge (@zerohedge) October 6, 2021
The S&P 500 dropped shortly after Hirono's comment.
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Update (1455ET): In a Wednesday statement, McConnell slammed Democrats for having "drifted to the doorstep of yet another self-created Democrat crisis," adding "Whether through miscalculation or a deliberate effort to bully their own members into wrecking the Senate, top Democrats have risked adding a default crisis to the inflation crisis, border crisis, and Afghanistan crisis they have already created."
"To protect the American people from a near-term Democrat-created crisis, we will also allow Democrats to use normal procedures to pass an emergency debt limit extension at a fixed dollar amount to cover current spending levels 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."
My new statement on the Democrats’ self-created debt limit crisis: pic.twitter.com/XwuqyS9oZ0— Leader McConnell (@LeaderMcConnell) October 6, 2021
Full statement below:
WASHINGTON, D.C. — U.S. Senate Republican Leader Mitch McConnell (R-KY) issued the following statement today on the debt limit:
-The unified Democratic government had two and a half months to address the debt limit through reconciliation. Instead. they drifted to the doorstep of yet another self-created Democrat crisis. Whether through miscalculation or a deliberate effort to bully their own members into wrecking the Senate. top Democrats have risked adding a default crisis to the inflation crisis. border crisis, and Afghanistan crisis they have already created.
-Republicans remain the only party with a plan to prevent default. We have already made it clear we would assist in expediting the 304 reconciliation process for stand-alone debt limit legislation. To protect the American people from a near-term Democrat-created crisis; we will also allow Democrats to use normal procedures to pass an emergency debt limit extension at a fixed dollar amount to cover current spending levels 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. Alternatively, if Democrats abandon their efforts to ram through another historically reckless taxing and spending spree that will hurt families and help China. a more traditional bipartisan governing conversation could be possible.'
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Update (1335ET): Senate Minority Leader Mitch McConnell told a closed-door meeting of Senate Republicans that he would offer a short-term debt ceiling extension or an expedited reconciliation process. Via Punchbowl News' Jake Sherman.
The move would avoid a US default, expected anywhere between Oct. 18 and early November based on various estimates.
Sherman also noted that the extension would buy Democrats until December.
🚨🚨 NEWS: MCCONNELL floated a short-term debt limit increase through NOVEMBER — aka lifting the limit until December.— Jake Sherman (@JakeSherman) October 6, 2021
This happened in a closed Senate Republican Conference steering meeting.
"I think you’re going to hear from Leader McConnell. He’s going to outline the proposal that he is prepared to discuss with Leader Schumer and I think that’s going to give us a way out of the woods, which is what we want," said Sen. Lisa Murkowski (R-AK) following the lunch.
Fox News' Chad Pergram is also reporting that McConnell's offer could change the pending vote this afternoon to end a filibuster on a bill to suspend the debt ceiling.
3) McConnell has told Democrats repeatedly the past few days that they should use the filibuster-proof reconciliation process to suspend the debt ceiling.— Chad Pergram (@ChadPergram) October 6, 2021
4) Fox has been told multiple times that both sides are looking for an off-ramp on the debt ceiling after digging in their heels. And Sen. Joe Manchin (D-WV) today rejected altering the filibuster to hike the debt ceiling. So, everyone is stuck— Chad Pergram (@ChadPergram) October 6, 2021
Is this a trap which would force Democrats to begin reconciliation if they accept?
Schumer and McConnell will meet later today to discuss.
Markets responded positively to the news:
And anxiety is collapsing:
And the US Treasury Bill curve before and after McConnell:
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Sen. Joe Manchin (D-WV) said on Wednesday that his topline number on the $3.5 trillion reconciliation bill is still $1.5 trillion, dispelling rumors that he'd come up as much as $2.2 trillion.
Manchin stresses that his reconciliation topline is $1.5 trillion. Says he won’t take questions (he is still talking tho) pic.twitter.com/WaATlx3Dd5— Seung Min Kim (@seungminkim) October 6, 2021
He also reiterated his opposition to a legislative carve-out of the filibuster as a potential escape hatch from a fight over the national debt ceiling, according to The Hill.
"I’ve been very very clear where I stand on the filibuster. Nothing changes," Manchin told reporters outside of his Senate office.
Manchin's comments come as the idea of a "carve-out" from the legislative filibuster, which requires 60 votes for most legislation, has gained steam within the Senate Democratic caucus
Democrats discussed the idea, as well as other potential back-up plans, during a closed-door caucus lunch on Tuesday, with Sen. Dick Durbin (D-Ill.) confirming that talks were underway.
But changing the legislative filibuster even just for a narrow carve-out on the debt ceiling was a heavy list for Senate Democrats given entrenched opposition to making changes to the 60-vote rule from Manchin and Sen. Kyrsten Sinema (D-Ariz.). -The Hill
In order to raise the debt ceiling without the filibuster carve-out, Democrats would need complete unity from their 50-member Senate caucus.
"The filibuster has nothing to do with debt ceiling. Basically, we have other tools that we can use and if we have to use them we should use them," Manchin said on Monday.
The West Virginia Senator suggested on Wednesday that Senate Majority Leader Chuck Schumer (D-NY) and Senate GOP Leader Mitch McConnell (R-KY) start negotiating.
"I truly implore both leaders ... to engage, start working, work this out," said Manchin, adding "We have a responsibility to be the adults... we should not have these artificial crises."
"Please lead, lead, work together."
Senate Democrats will hold an emergency caucus at 1pm this afternoon, according to Politico's Burgess Everett.
Senate Democrats will have a special caucus at 1 pm this afternoon ahead of debt limit vote— Burgess Everett (@burgessev) October 6, 2021