Mitch McConnell, Chuck Schumer Agree to Deal to Avert Debt Crisis

The U.S. Senate appears to have narrowly avoided a federal financial crisis—pushing off the vote on the debt ceiling until December, after Senate Minority Leader Mitch McConnell offered a temporary out for Democrats on Wednesday.

After several hours of negotiating the details, the stopgap debt ceiling measure appears to be set for Senate vote on Thursday. The deal will also require House approval.

"I have some good news," Senate Majority Leader Chuck Schumer, a New York Democrat, said on the floor Thursday morning. "We have reached an agreement on an extension of the debt ceiling through early [December]."

McConnell, a Kentucky Republican, also acknowledged the deal on Thursday, chiding Democrats for not addressing the debt limit earlier.

Neither offered many details beyond the new December deadline.

Democrats and Republicans had been in a standoff for weeks, as McConnell refused to back a proposal to lift the debt ceiling before a projected October 18 cliff. The federal government has never previously defaulted on its debt, and Republicans, backed by Democrats, repeatedly lifted the debt limit during President Donald Trump's administration.

The focus on the nation's debt has come as a distraction while Democrats are trying to pass two key pieces of President Joe Biden's agenda—a $1.2 trillion infrastructure package to upgrade roads, bridges, broadband and other priorities, and as much as $3.5 trillion to expand the social safety net by instituting universal pre-kindergarten, paid family leave, free community college and other proposals Biden campaigned on.

The U.S. House had been on track to advance the infrastructure package last week, but Democratic in-fighting derailed the attempt.

With the debt crisis temporarily averted, Congress is expected to pivot back to those priorities.

But McConnell signaled that Republicans won't be on board when the debt ceiling arises as an issue in two months. He's been pushing Democrats to go alone on the debt issue as they push for trillions in spending on their priorities.

The Senate can use a process, known as "reconciliation," to sidestep Republicans on the debt vote. Democrats have avoided doing so, arguing that the nation's debt is a product of previous spending. Again on Wednesday, several signaled that they won't be on board to use the reconciliation maneuver when the debt issue comes back up in the coming months.

Biden met with business leaders on Wednesday to discuss the potentially catastrophic impact of a debt default.

"Raising the debt limit is paying our old debts," he said, noting that the process is typically bipartisan. "It has nothing to do with new spending or what may be coming this year or other years."

Senators tackle debt ceiling crisis
After several hours of negotiating the details, a stopgap debt ceiling measure appears to be set for Senate vote on Thursday. Above, the U.S. Capitol in the late afternoon on December 21, 2020. Cheriss May/Getty Images