The upliftment of the debt ceiling has been a major concern in the past few days in the financial markets all over the world. The arguments between the democrats and republicans were being stretched and on Wednesday, McConnell offered that the country can extend the debt limit instead of demolishing it.
President Joe Biden had previously asked the republicans to move out of the way of the progress of the country and to let them do their job by saving the country from defaulting. As indicated by Janet Yellen, the US is going to exhaust all its emergency funds by the 18th of October and a quick measure needs to be taken to pay the bills on time. This could create havoc across the globe and the US is the most influencing economy of the world.
The republicans did not want to lift the debt ceiling and suggested budget reconciliation as a measure to fight the problem. They had made a major impact on the decision with their voting majority in the senate. The bill has not been passed yet as there is no formal deal signed by both parties. As Joe Biden pressurized and insisted the republicans see the problem through the point of view of democrats and come to a solution rather than negotiating for a very long time, a middle ground was achieved.
In the recent meeting, McConnell has made an offer that the debt ceiling should not be abolished, instead, it should be stretched by a certain amount. This arrangement will save the country from defaulting on the 18th of October. The republicans do not want to come in the way of the democrats as they want to protect the country and the world’s economy from a catastrophe.
This will take the blame off from them that they are obstructing the path towards the betterment of the nation. McConnell stated that the ceiling will be lifted for a short interval of time and by the end of the year some other way needs to be figured out to deal with the problem. Budget reconciliation is an option suggested by them and by the end of the year there would be enough time for the officials to look into it.
The debt limit will be raised by fixing the number of dollars that are required to cater to the needs for the current scenario only. This is a step that will be taken considering it an emergency and the conditions will get back to normal once the emergency is tackled.
Viewing this from the democrats’ side, the issue will stand on its previous position if no alternative is decided in the coming months. Raising the debt ceiling will fulfill the current requirement. This is the key difference between raising it and demolishing it.
No formal agreement has been signed on this offer but it is expected soon in the coming days. The decision will be made by at least 60 favorable votes in the cabinet. 50 members of the senate are republicans so at least 10 republicans have to agree with the arrangement made by the democrats.
Ted Cruz, a member of the Republican Party in the senate remarked that the country isn’t going to default and the democrats know that. The issue is becoming more of a political playground.
The democrats however negated his comments and said that the republicans are trying to combine the economic and political issues and create confusion amongst the public. The country does need an immediate solution to the problem.
Jen Psaki, White House Press Secretary commented on the offer made by Mitch by saying that this offer has complicated the matter even more as it is not a full-proof solution. He says since the details are derived from a press release rather than a formal agreement, the ambiguity on the matter persists. From the details that have been drawn, it appears that this would create a long cumbersome process for the country involving many risks. The issue is being delayed rather than resolving it once and for all.
The response of Chuck Schumer, the leader of the majority, or Nancy Pelosi will give a further update on the issue. A final decision is still awaited as this will have a major impact on the global economy and currencies all over the globe as well.