WASHINGTON — Senate leaders announced an agreement Thursday to extend the government’s borrowing authority into December, temporarily averting an unprecedented federal default that experts say would devastate the economy.
“Our hope is to get this done as soon as today,” Senate Majority Leader Chuck Schumer declared. Republican leader Mitch McConnell, whose party has been blocking the debt limit extension, said, “The Senate is moving forward.”
The first crucial vote on the measure was set for Thursday night.
Republican leaders were working to find the 10 votes they need from their party to advance the extension. John Thune of South Dakota, the second-ranking Senate Republican, said, “In the end we’ll be there, but it will be a painful birthing process.”
In their agreement, the Republican and Democratic leaders edged back from a perilous standoff over lifting the nation’s borrowing cap, with Democratic senators accepting an offer from McConnell.
McConnell made the GOP offer a day earlier, just before his Republicans were prepared to block longer-term legislation to suspend the debt limit and as President Joe Biden and business leaders ramped up their concerns that a default would disrupt government payments to millions of people and throw the nation into recession.
For the moment, Biden wouldn’t say whether he’d sign a short-term extension, telling reporters during a visit to Chicago, “we gotta see if the deal is done. I’m not sure of that yet.”
But the White House signaled the president’s support, with principal deputy press secretary Karine Jean-Pierre calling it a “positive step,” even as she assailed Republicans for blocking Democratic efforts.
“It gives us some breathing room from the catastrophic default we were approaching because of Sen. McConnell’s decision to play politics with our economy,” she told reporters.
Wall Street rallied modestly on the news.
The agreement sets the stage for a sequel of sorts in December, when Congress will again face pressing deadlines to fund the government and raise the debt limit before heading home for the holidays.
The agreement will allow for raising the debt ceiling by about $480 billion, according to a Senate aide familiar with the negotiations who spoke on condition of anonymity to discuss them. That is the level that the Treasury Department has said is needed to get to Dec. 3.
“Basically, I’m glad that Mitch McConnell finally saw the light,” Bernie Sanders, the independent senator from Vermont, said late Wednesday.
McConnell portrayed it differently.
“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 (reconciliation),” McConnell said Thursday. “Now there will be no question: They’ll have plenty of time.”
Congress has just days to act before the Oct. 18 deadline when the Treasury Department has warned it would quickly run short of funds to handle the nation’s already accrued debt load.