U.S. Senate Signs Off on Debt Ceiling Deal, Punts to December

The U.S. Senate has formally agreed to avert a looming debt crisis—but just for two months.

The Senate voted 50-48 on the temporary debt ceiling fix Thursday. It also requires House approval, however, Californian Democrat and House Speaker Nancy Pelosi said Thursday she supported the deal, and would call representatives back to session if need be.

The Senate deal raises the public debt limit by $480 billion—extending the federal government's borrowing power through around December 3. The Treasury Department had predicted that the government would exhaust its borrowing power and default on its debt for the first time ever this month, if action wasn't taken.

Senate Majority Leader Chuck Schumer, a New York Democrat, announced Thursday morning that after overnight negotiations, he had reached a deal with Senate Republicans to delay the debt ceiling until early December.

"I have some good news," he said. "It's our hope we can get this done as soon as today."

But it wasn't an easy process, even after that announcement. Senate GOP leaders spent much of Thursday trying to drum up 10 Republican votes that would allow the final vote to go through.

Schumer and Senate GOP Leader Mitch McConnell had been in a standoff for weeks over how to address the debt limit. McConnell, a Kentucky Republican, said Republicans would not agree to raise the debt ceiling and that Democrats would have to take measures to act on their own.

McConnell retreated from his stance, offering the short salvo to Democrats in a public statement Wednesday.

Democrats hold 50 seats in the chamber, plus a tie-breaking vote from Vice President Kamala Harris, when needed. They can use a procedural maneuver, called "reconciliation," to get votes through on that slim margin, but Schumer argued that would be a lengthy process and that Republicans should join Democrats in favor of a vote that could get through with 60 senators.

It's unclear how Democrats will handle the issue when it arises again.

McConnell said the new delay buys Democrats a few more weeks to try to navigate that longer process.

McConnell has cited the trillions that Democrats want to spend to get key pieces of President Joe Biden's agenda accomplished in his opposition to voting for the debt increase and argued that the debt ceiling fight was a "manufactured crisis."

"I hope we can find a bipartisan approach to it," Senate Majority Whip Dick Durbin, an Illinois Democrat, told reporters at the Capitol on Thursday.

The debt crisis emerged as a leading issue this week, distracting from the Democrats' larger priority bills—a $1 trillion infrastructure package for roads, bridges, broadband and other upgrades and as much as $3.5 trillion for a massive expansion of the social safety net, including universal pre-kindergarten, free community college, paid parental leave and other items Biden campaigned on last year.

Economists had warned that a federal debt default would send shockwaves across financial markets.

Biden met with top business executives at the White House Wednesday to highlight the issue.

US Senate agrees to debt ceiling deal
A pre-dawn view of the U.S. Capitol on Wednesday morning October 6, 2021 in Washington, DC. Senate Majority Leader Chuck Schumer will try again on Wednesday to advance a debt-ceiling suspension bill that Republicans have vowed to block via the filibuster. Congress has until October 18 to raise the debt ceiling or risk default that would have widespread economic consequences. Drew Angerer/Getty Images