It is an agreement in principle that should avert disaster … at least for two months. While the Treasury warned it could be in default on Oct. 18, Republican Leader Mitch McConnell offered a temporary solution on Wednesday, and several Democratic senators have indicated they are in favor.
Mitch McConnell offered to suspend the debt ceiling until December to “protect Americans from a short-term Democrat-induced crisis.” This should therefore give Joe Biden, Chuck Schumer and Nancy Pelosi more time to negotiate a compromise in Congress to raise the debt ceiling, or to force through the long process of “budget reconciliation”. This is a complex parliamentary shuttle mechanism that allows a text to be adopted with a simple majority of 50 senators, against the usual 60.
Wall Street on the rise
This rebound follows intense negotiations in Congress, and the rise to the niche of Joe Biden, who accused Republicans of “playing Russian roulette” The White House reacted lukewarm to the proposal, his spokesman Jen Psaki calling on Republicans “not to push back on problems” when a long term solution can be found.
“Why not do it now,” she said, referring to the blockade exercised by the Republicans. This did not prevent Wall Street from ending up on Wednesday, satisfied with this sketch of a solution.