PORTLAND, Ore. (KOIN) — U.S. Senate Minority Leader Mitch McConnell has given Democrats a new offer to extend the federal debt ceiling, and Oregon’s U.S. Sen. Jeff Merkley gave KOIN 6 News an update on the situation.
The offer would offer an emergency short-term extension through December. However, this only delays the threat of federal default.
This is amid an escalating standoff about the government’s borrowing limit. Democrats warn that missing the Oct. 18 deadline could send the economy into another tailspin.
“Just the possibility of default, starts to produce an impact on the cost of credit for America, a 1% increase in interest rates for us to borrow would be 200 billion additional dollars to pay on the debt in interest,” said Merkley. “$200 billion, it couldn’t go to housing, health care, education, infrastructure, and so forth.”
If the default happens, it would be the first-ever default on federal debt.
Merkley added that negotiations continue the Build Back Better Plan, which is a package that would increase the social safety net.
“The President’s been trying to get key Democrats to sit down and go through each of the programs, say, ‘Okay, how can we trim this? How can we protect this? Do we have the support for it?’’ said Merkley.
The plan is tied together with the $1 trillion bipartisan infrastructure bill that was approved by the Senate and is still waiting for enough votes in the House.
Merkley is set to have a caucus meeting with leadership on Oct. 6 to help address the debt ceiling.