Mitch McConnell, the Senate’s top Republican, has offered Democrats two pathways to avoid a debt limit crisis, a rare olive branch in a long-running stand-off that has spooked investors and corporate America.
While McConnell, the Senate minority leader, continued to blame Democrats for putting the US government at risk of running out of money, he gave two options that could offer a path out of the current paralysis in Washington: Republicans would either help expedite the reconciliation process that would allow Democrats to raise the debt ceiling on their own, or approve a short-term extension of the borrowing limit through December.
Jen Psaki, the White House press secretary, offered a chilly response. “There’s been no formal offer made. A press release is not a formal offer,” she said, adding: “We don’t need to kick the can”.
Chuck Schumer, the Senate’s top Democrat, did not immediately comment. A crucial procedural vote set for Wednesday afternoon on a measure that would raise the debt ceiling and avert a default crisis in just over a week — which Republicans had been expected to block — was subsequently postponed.
Earlier on Wednesday, Joe Biden sought corporate America’s help in his attempt to convince Congress to raise the US borrowing limit, holding a virtual meeting with a group of chief executive and business leaders including Jamie Dimon of JPMorgan Chase, Jane Fraser of Citigroup and Brian Moynihan of Bank of America, as well as Greg Hayes from Raytheon and Pat Gelsinger of Intel.
Fraser warned that the US was “playing with fire” in its brush against the debt limit, as she urged Congress and the administration to resolve the crisis as quickly as possible.
Dimon said the consequences of a possible default would range from a “recession” to a “complete catastrophe”, and undermine US credibility around the world. “This is a time I think we should show American competence, not American incompetence,” he said.
Adena Friedman, chief executive of Nasdaq, added that she was already “starting to experience volatility” in the financial markets. “Investors really just don’t handle uncertainty very well,” she said.
Janet Yellen, the US Treasury secretary, also attended the meeting. She has warned that the US risks running out of cash to pay its bills after October 18 without an increase.
Biden has tried to portray Republican opponents of the debt ceiling increase as playing “Russian roulette” with the US economy and financial markets, raising tensions between the party’s lawmakers and their allies and donors in the business community.
Republican lawmakers have insisted they will not sign on to raising the debt limit, seeking to tie the effort to Democrats’ ambitious spending plans, including the president’s proposals for a $1.2tn infrastructure bill and a $3.5tn social spending package.
Democrats contend that Republicans are being hypocritical, given they voted to lift or suspend the debt ceiling three times when Donald Trump was president, and most of the government’s current borrowing is needed in order to pay for costs incurred during the previous administration.
Schumer has asked Republicans to agree to suspend the filibuster — which in effect requires at least 60 senators to sign on to most legislation, meaning at least 10 Republicans would have to join all 50 Democrats. If so, his party can lift the debt ceiling on their own, using a simple majority.
But McConnell has refused, insisting that Democrats use a more complicated manoeuvre called reconciliation to pass the measure without his party’s support. Schumer and the White House argue reconciliation would be too risky and time-consuming to avert a crisis by the middle of the month.
Some Democrats have floated the idea of temporarily and unilaterally suspending the filibuster in order to raise the debt ceiling. When asked about the idea on Tuesday night, Biden told reporters it was “a real possibility”.
Joe Manchin, the Democratic senator from West Virginia who has long opposed scrapping the filibuster and whose support would be required for such a move, told reporters that his stance had not changed.
“I truly implore both leaders [Schumer and McConnell] to start working . . . this out,” he added. “There should not be a crisis.”
Several lawmakers and former officials have warned that a default would have diplomatic implications for the US government. Six former US defence secretaries, including Jim Mattis, who served in the Trump administration, warned in an open letter to congressional leaders on Wednesday that a default would have “catastrophic consequences” for the US military and the country’s “position of leadership in the world”.
The White House’s Council of Economic Advisers warned on Wednesday that without action, it could take “decades” for the US to recover.
“Financial markets would lose faith in the United States, the dollar would weaken, and stocks would fall,” they wrote, adding: “The debt ceiling is not and should not be used as a political football. The consequences are too great.”
https://news.google.com/__i/rss/rd/articles/CBMiP2h0dHBzOi8vd3d3LmZ0LmNvbS9jb250ZW50Lzc4NTg2OTcyLTMwODgtNDdhZC1iMzQwLTYzYTJhNjU1MTBmONIBP2h0dHBzOi8vYW1wLmZ0LmNvbS9jb250ZW50Lzc4NTg2OTcyLTMwODgtNDdhZC1iMzQwLTYzYTJhNjU1MTBmOA?oc=5
2021-10-06 18:59:41Z
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