Senate Democrats and Republicans reached an agreement to suspend the debt ceiling and prevent the country from defaulting on the national debt on October 18, announced Thursday the leader of the Democrats in that chamber, Chuck Schumer.
The agreement will allow suspending the debt ceiling until December 3 and avoid the feared default, which could have unleashed chaos in the financial markets and downgraded the U.S. credit rating.
“We have reached an agreement to extend the debt ceiling through early December,” Schumer announced from the floor.
The Democrat noted that the Senate could vote this Thursday on a bill to resolve the issue, although a time has not yet been set for that vote.
To become law, the initiative would still need to receive the approval of the Democratic-led House of Representatives.
Just after Schumer announced the agreement, the Dow Jones Industrials, Wall Street’s leading index, rose 540 points or 1.56%; while the Nasdaq Composite index, which lists the most important technology companies, rose a remarkable 1.43%.
The rapprochement between the two parties comes after Senate Republican leader Mitch McConnell on Wednesday offered a deal to Democrats to find a temporary solution.
Specifically, McConnell said he was willing to suspend the debt ceiling until December of this year, instead of until December of next year as Democrats, who do not want to talk about that issue during the campaign for the November 2022 legislative elections, wanted.
McConnell explained Thursday from the floor that Democratic and Republican aides had “negotiated all night in good faith” and ironed out the details of the pact.
“The (Democratic) majority didn’t have a plan to avoid defaulting on the debt, so we stepped up,” the Republican said.