The last-minute deal on the debt ceiling that only saves the economy for now

By Lauren Fox, CNN

A rare moment Wednesday on Capitol Hill gave way to a potential deal on the debt ceiling.

Senate Minority Leader Mitch McConnell blinked after a three-month stalemate with Democrats. Democrats appear to have taken a deal that many in the caucus acknowledge is little more than kicking the can down the road.

But as aides and members have made clear to CNN over the course of the last 15 hours, what other choice was there? Democrats were insistent they’d run out of time to use a convoluted budget process and moderate Democratic Sen. Joe Manchin of West Virginia wasn’t budging on changing the rules of the Senate, even in the midst of this emergency.

What transpired Wednesday and is still being negotiated Thursday morning is the bare minimum way out of this, but it’s a way out. That more than anything explains the motivations here.

Bottom line: The potential for a fiscal calamity was real and getting more dire every day this stalemate continued. That was becoming painfully clear to lawmakers on both sides of the aisle. The fear of a downgrade to the US credit rating was a real and present danger. But make no mistake that even if a deal is reached Thursday (and aides say it’s moving in the right direction), an agreement delays, but does not resolve, this showdown.

Democrats still say they won’t use reconciliation (even though they would now have the time to do so) and Republicans say they won’t help pass a longer-term debt ceiling increase.

In other words, déjà vu is coming to a late November/early December near you.

Inside the talks

Republican and Democratic aides confirm Majority Leader Chuck Schumer’s upbeat rhetoric shortly after midnight overnight. Things are progressing, but closing out a deal after both leaders avoided negotiating for months takes time. There are discussions ongoing about how long a short-term debt limit increase should be. Democrats want something longer. Republicans are looking to keep this as tight as possible, potentially teeing it up with the government funding deadline that is also coming in early December.

The other obstacle here is agreeing on the exact dollar amount for the increase. Republicans will also have to find 10 GOP votes for this to break a filibuster. After months of his caucus unifying behind the idea they weren’t going to lift a finger to help Democrats on the debt ceiling, the whip operation will have some work to do. One potential option had been to try and get agreement to just do this vote on a simple majority, but aides close to this process have said that conservatives in the conference will insist on a procedural vote at a 60-vote threshold. Expect that whip operation to get underway once a deal is actually brokered. And look out for who has to walk the plank on that.

So when does this end?

Next week is supposed to be Senate recess. Nothing motivates Congress like jet fumes. It’s Thursday, which means it’s Senate Friday and lawmakers are ready to get out of this place. But, how long this takes depends on a few factors.

First, how long does it take McConnell and Schumer to hammer out this deal? Then, how much do members want to slow this process down. Anything is possible in the Senate with the agreement of all 100 senators. If any one of them has an objection, however, it can really drag this process out. Some of the usual suspects don’t seem too keen on holding up the inevitable and making the markets nervous, but this still needs to play out.

Republican Sen. Josh Hawley of Missouri told CNN on Wednesday that he won’t vote for this thing, but he’s going to take his cues from McConnell in terms of timing. In other words, he didn’t seem like he’d stand in the way of moving this along. We will know more when lawmakers come in later this morning.

So why’d McConnell do it?

McConnell’s announcement to his conference on Wednesday that he was going to offer Democrats a short-term off ramp came as a surprise to many in his conference. One member described it as “whiplash” after months of McConnell’s insistence that Democrats were on their own when it came to increasing the country’s borrowing limit. Another aide confided that the discussion in conference Wednesday was a bit “rowdy.”

Multiple GOP aides trying to catch up after lunch noted they were just as shocked. But, McConnell’s offer doesn’t come without some upsides for Republicans. Always the consummate tactician, McConnell’s allowance to kick the can down the road will potentially put the next crisis right around the end of November or early December when lawmakers are rushing to also fund the government.

Republican aides also pointed out that despite his willingness to chip away at Senate rules by eliminating the filibuster for Supreme Court nominees, it’s also possible that the real threat of the elimination of the filibuster was a motivating factor for Republicans here. The potential rules change Democrats were talking about might have been intended as a one-time only deal, but in practicality, the fear on the GOP side was this could have lasting implications on the US Senate. When you are in the minority, you tend to be more sensitive to losing all your power.

Why do Democrats appear on track to take it?

Besides the reality that Democrats hold all the levers of government and likely would have taken a serious hit politically if a default happened on their watch, voting now on even a short-term debt ceiling increase gives Democrats time and space to work on Biden’s agenda. Party leaders are engaged in an all-out effort right now to work with the various factions of the party to narrow and slim down Biden’s social safety net package. That work can’t be done in a week (as we saw in the House), but instead has to be hammered out meticulously as members make incredibly difficult decisions about what will be cut or pared back in the package. With the debt ceiling crisis taking center stage, those party-wide negotiations were getting sidelined.

“It gives us the next two months to focus on finishing the build back better agenda,” Sen. Chris Coons, a Democrat from Delaware, told CNN of taking the deal.

A reminder that nothing has changed: Democrats were insistent Wednesday that they won’t use that budget process to increase the debt limit. That hasn’t changed even now that they would have plenty of time to do it. Democrats view that as a terrible precedent to set. They don’t want to do it and they don’t plan to do it so who knows how the next debt ceiling standoff ends.

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