Schumer could reveal deal on lifting debt limit this week, analysts say

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Senate Majority Leader Chuck Schumer may be able to announce a deal this week that would raise the federal borrowing limit and protect the US government from defaults, according to analysts.

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Hopes of a deal between New York Democrat and Senate Minority Leader Mitch McConnell, a Kentucky Republican, come after a standoff over debt limits in October. There are indications that this month may provide ease on this issue.

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“If Schumer and McConnell don’t see any advantage in engaging in a reduction like this this time, there are a number of ways to lift it relatively painlessly. This could include a punt-and-raise, where the regular order-of-lunch might not be the case.” Another short-term increase through the medium is followed by a longer-term increase through reconciliation,” Ben Colton, director of research at Beacon Policy Advisors, said in a note on Monday.

“Another option is to use the National Defense Authorization Act (NDAA) to create an expedited process for Democrats to raise the debt limit through reconciliation. We expect Schumer to take some bipartisan route on debt limits this week. will announce.

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Budget reconciliation refers to the process of passing legislation through a simple Senate majority with 51 votes.

From the archives (September 2021): What happens if America defaults on its debt?

And What will the Fed do if the government hits the debt limit?

Ed Mills, Washington policy analyst at Raymond James, said that although Defense ITA,
+2.80%
The bill stalled in the Senate last week, with reports indicating that a settlement bill from the House could break the impasse as soon as this week.

“A debt ceiling measure is also being looked at for possible inclusion in the NDAA,” Mills said in a note. “While the prospects for this going forward as part of the defense package are mixed, a combined bill would be another major breakthrough for the year-end agenda. This would lead to Senate confirmation and finalization of the BBB bill as remaining items (assuming there are no other crises), which could play a positive role in the BBB’s chances of being finalised.

The BBB refers to President Joe Biden’s Build Back Better Act, a $2 trillion social-spend and climate package that Schumer aims to pass by Christmas.

Schumer promised last week that his chamber would act on raising the federal government’s borrowing limit by December 15, which is the date the Treasury Department has said it could be left with insufficient resources.

NS Congressional Budget Office The U.S. has estimated that the Treasury is likely to run out before the end of December if the debt limit is not raised, while the bipartisan policy center has estimated that the government will have insufficient funds to meet all its fiscal obligations in the meantime. Cash is likely. 21 December and 28 January.

“Budget experts believe the Treasury could stumble for the next two weeks before a real crisis hits, but waiting until after Christmas is now considered risky,” Greg Vallier, chief US policy strategist at AGF Investments, said in a note. Goes.”

“We believe Chuck Schumer will have to cave, Democrats have embarked on a reconciliation process to raise the ceiling. Could this be linked to the Defense Bill? Perhaps, but key leaders are humming. In any case, we Don’t expect a US default.”

Schumer told his fellow Democratic senators in a letter on Monday that they be ready to go to work in the coming weekend.

“For this coming week, we look forward to a final conference agreement on nomination processing and the NDAA. Because of the time it takes to process those items in the Senate without cooperation, senators must prepare for potential weekend votes,” he wrote.

US stocks forecast the DJIA,
+1.69%

spx,
+0.85%
Trading rose higher on Monday as investors digested the latest news on the spread of the coronavirus and prepared for new inflation data later in the week.

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