Following Biden’s pressure, Mitch McConnell proposed extending the short-term debt ceiling.

U.S. Senate Minority Leader Mitch McConnell speaks to reporters at the U.S. Capitol in Washington, August 3, 2021

Kevin Lamarck | Reuters

Senate Minority Leader Mitch McConnell on Wednesday proposed a short-term moratorium on U.S. debt to avoid national defaults and the economic crisis until Democrats are able to pass a more lasting solution before the end of the year.

“To protect the American people from the near-term Democrat-created crisis, we will allow Democrats to use the usual method to raise the emergency debt limit by a certain amount of dollars to cover current spending levels in December.” A statement posted on Twitter.

The Kentucky Republican added, “This will stimulate Democrats’ excuses about the time crisis they have created and give the unified Democratic government enough time to pass a separate debt limit law by reuniting.”

The development comes at a time when President Joe Biden and Democratic leaders in Congress are increasing pressure on Republicans to work on debt.

McConnell’s stopgap offer will put some pressure on both parties to reach an agreement by October 18, when the Treasury Department estimates that the United States will end its urgent efforts to pay government bills.

McConnell reiterated on Wednesday that if Democratic leaders want to fix the orrow acceptance limit before the October deadline, the GOP Democrats will help speed up a reconciliation bill to lift the adoption cap.

Most economists say the US default will mark an economic catastrophe, and Treasury Secretary Janet Yellen warned on Tuesday that she would “fully anticipate” a recession if it happened. Biden echoed him on Wednesday, saying the default would lead to “suicidal wounds that would put the market at risk of tanking and eliminating the cost of savings and jobs.”

In recent weeks there have been clashes between Republicans and Democrats over how to increase or suspend the federal arrow limit, including House Speaker Nancy Pelosi, D-Calif. Open to McConnell’s potential plans.

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Pelosi and Schumer’s representatives did not immediately respond to CNBC’s request for comment.

According to Texas Republican Sen. John Cornin, McConnell and Schumer are scheduled to meet on Wednesday, which could bring more clarity about a possible deal.

Last week, the White House significantly increased pressure on Republicans in Congress.

On Monday, Biden said Republicans’ refusal to join Democrats in a vote to suspend Democracy was “hypocritical, dangerous and shameful,” especially after they voted several times during former President Donald Trump’s four-year rule.

“Not only are Republicans refusing to do their job, they’re threatening to use their power to prevent us from doing our job – to save the economy from a catastrophic event,” Biden said.

On Wednesday, Biden made the same point during a White House event with the chief executives of Fortune 50, which focused on the dire consequences of credit default.

The White House has not yet responded to McConnell’s offer, and will likely go back to Schumer and Pelosi to formally accept the rejection.

Senate Minority Leader Mitch McConnell (R-KY) walks to his office in the U.S. Capitol on October 06, 2021 in Washington, DC.

Kevin Dietsch | Getty Images

While it’s not clear how the Republican proposals came together, Biden said Monday that he plans to talk to McConnell the next day.

Biden and McConnell have a long-standing relationship of mutual respect that has served in the Senate. During the Obama administration, Biden served as the informal liaison between the Obama White House and the Republican-controlled Senate.

If the Democrats accept McConnell’s proposal, the GOP leader will effectively counter the Democrats’ main attack: they stood up when the Republicans worked to avoid a catastrophic default.

If they accept the deal, Democrats will promise to raise the limit through a reconciliation bill, rather than a moratorium. The moratorium allows the government to float new debt for a certain period of time, instead of limiting it to a certain dollar range.

Politicians often prefer to postpone because it looks better before the election.

Democrats will probably have to raise the ceiling north or north of the ceiling0 trillion dollars. And while both Republicans and Democrats are responsible for total debt, raising the limit weakens Democrats in the midst of 2022 on allegations of reckless, debt-financed spending.

Ilan Mui of CNBC contributed to the report.

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