(Bloomberg) — Senate GOP leader Mitch McConnell is offering Democrats an agreement on raising the U.S. debt ceiling through November, alleviating the immediate risk of a default.
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The proposal would push back the partisan confrontation over the debt ceiling but not resolve it. It would increase the ceiling by a fixed dollar amount that would be sufficient to tide the Treasury over until 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 in a statement.
Stocks rose on the news, reversing an earlier decline, as investors reacted with relief to the prospect of dodging a crisis. The S&P 500 Index hit a session high, rising 0.2% at 2:13 p.m. in New York.
Senate Majority Leader Chuck Schumer hasn’t received an offer according to a spokesman, who declined to comment about whether Schumer would agree to it.
Schumer plans to hold a procedural vote Wednesday to advance a bill that would suspend the debt ceiling until December 2022. Republicans are expected to block it.
McConnell is demanding Democrats raise the debt limit using a more cumbersome process known as reconciliation that is being employed for legislation to enact much of President Joe Biden’s agenda and exempts it from any GOP filibuster.
Schumer has said there isn’t enough time to use reconciliation, but a short term increase in the ceiling would provide that time.
Budget experts have said using reconciliation would take about two weeks. Treasury Secretary Janet Yellen projects that the U.S. will reach its limit on sovereign debt on about Oct. 18. The Bipartisan Policy Center think tank on Wednesday put the estimated date of a payment default between Oct. 19 and Nov. 2.
A default could have catastrophic results for the economy that include raising the cost of borrowing by driving up interest rates, rattling financial markets and delaying Social Security payments to the elderly.
(Updates with McConnell statement in third paragraph)
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