Democrats accepted an offer from Senate Minority Leader Mitch McConnell on Wednesday for a short-term suspension of the debt ceiling, delaying a showdown over the nation’s borrowing limit until December.
The Kentucky Republican specified that his proposal was contingent on a Democratic agreement that long-term action to raise the debt ceiling would be achieved unilaterally via budget reconciliation. The process allows specific spending and tax measures to avert the Senate’s 60-vote filibuster threshold and pass with a simple majority.
“This will moot Democrats’ excuses about the time crunch they created and give the unified Democratic government more than enough time to pass stand-alone debt limit legislation through reconciliation,” Mr. McConnell said.
Senate Democrats said they support the two-month suspension but using reconciliation for a long-term fix is off the table.
“We’ve made it clear we’re not doing it through reconciliation. That’s a recipe for a long-term disaster,” said Sen. Christopher Murphy, Connecticut Democrat. “It’s up to Republicans. I hope in December we’re not [extending the debt ceiling] through March.”
Mr. McConnell made the offer shortly before Republicans were planning to block legislation to suspend the debt ceiling until December 2022 and as President Biden and banking and financial leaders ramped up concerns that an unprecedented federal default would disrupt government payments to millions of people and throw the economy into recession.
Citigroup CEO Jane Fraser said defaulting would “cause lasting damage to the credibility of the United States with investors and in financial markets around the world.”
“The ramifications are not limited to the markets,” she said. “It’s already beginning to cause some damage in the economy. It will hurt consumers. It will hurt small businesses.”
Treasury Secretary Janet Yellen has warned that the government will run out of money to pay its bills on Oct. 18.
Democratic leaders are wary of reconciliation because it would force them to specify a new amount for the nation’s borrowing limit. The number, which would be above the current limit of $28.8 trillion, opens vulnerable lawmakers to attack during next year’s midterm elections.
Democrats hope to extract concessions from Mr. McConnell when the government funding deadline and the debt ceiling suspension come up again in December. An attempt to couple the debt ceiling to legislation preventing a partial government shutdown failed at the hands of a Republican filibuster last month.
Regardless, Democrats are confident that Republicans will capitulate during another showdown over the debt ceiling.
“What we’ve seen is that Republicans are eventually willing to join us to do the right thing. This is for only three months, but it is clear that Republicans know that they would get the blame for a default,” Mr. Murphy said. “That’s what we’ve said all along.”
Sen. Elizabeth Warren, Massachusetts Democrat, said Mr. “McConnell caved” by offering a short-term suspension of the debt limit and would do so again.
Former President Donald Trump echoed a similar sentiment shortly after news of Mr. McConnell’s proposal broke.
“Looks like Mitch McConnell is folding to the Democrats, again,” Mr. Trump said in a statement. “He’s got all of the cards with the debt ceiling, it’s time to play the hand. Don’t let them destroy our country.”
Sources close to the Republican leader say the proposal is a logical extension of his position that he wants Democrats to raise the debt ceiling on their own through reconciliation.
Such a maneuver would put Democrats on record as voting to increase the national debt well above $30 trillion and would likely delay Mr. Biden’s $3.5 trillion expansion of the federal safety net.
Democrats are planning to use reconciliation to move the more extensive package, which includes a slew of liberal priorities such as action on climate change, tuition-free community college and expanded health care programs.
“If Democrats abandon their efforts to ram through another historically reckless taxing and spending spree that will hurt families and help China, a more traditional bipartisan governing conversation could be possible,” Mr. McConnell said.
The short-term suspension is likely to only postpone a debt ceiling showdown, provided reconciliation is not an option, as Democrats claim.
Stock prices rallied from a morning loss after Mr. McConnell’s offer was announced.
Democratic lawmakers this week began exploring whether they would have sufficient support to change the filibuster rules so that debt-ceiling votes would need only a simple majority of 51 votes instead of 60. For such a carve-out to be enacted, all 50 Democrats in the evenly split Senate would need to back the change.
The idea was quickly rebuked by Sen. Joe Manchin III of West Virginia, a critical Democratic swing vote. Mr. Manchin said lawmakers had a responsibility to protect the credit of the U.S. and its institutions.
“I’ve been very, very clear where I stand on the filibuster,” Mr. Manchin said. “I don’t have to repeat that. I think I’ve been very clear. Nothing changes.”
Amid the partisan bickering over the debt ceiling, polls show that voters’ opinions are mixed.
A survey conducted last week by The Hill/HarrisX found that 54% of registered voters oppose raising the borrowing limit, while 46% support the move. A poll from The Economist/YouGov found that 34% of adults favor raising the limit and 32% oppose, with 34% undecided.
Both surveys indicate that a position on the topic is closely associated with partisan affiliation. Republicans are vehemently opposed to raising the debt limit, and Democrats support increasing it.
• Jeff Mordock contributed to this article, which is based in part on wire service reports.