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Moments after the news hit that Top Senate Republican Mitch McConnell made a debt ceiling extension offer to the Democrats, we warned that the risk is that Dems throw up all over the symbolic fig leaf.

If Dems accept McConnell’s extension they will be bound to begin reconciliation process, which they have said they won’t do. Risk they punt

— zerohedge (@zerohedge) October 6, 2021

Not long after, Goldman’s top political strategist Alec Phillips published a note in which he confirmed the same, basically saying that McConnell’s offer is “unlikely to be attractive to Democrats.”

He explains why below:

Senate Minority Leader McConnell has released a statement that offers Democrats two things on the debt limit. First, unsurprisingly, he offers to expedite the reconciliation process to allow Democrats to increase the debt limit that way.  We had expected that if Democrats opted to use that process, it would occur close enough the deadline that both parties would agree to waive some of the usual time frames involved. 

The second part of Sen. McConnell’s offer is new, but is unlikely to be attractive to Democrats: “To protect the American people from a near-term Democrat-created crisis, we will also allow Democrats to use normal procedures to pass an emergency debt limit extension at a fixed dollar amount to cover current spending levels into December.” (emphasis ours).

This would mean that Democrats would need to vote twice to increase the debt limit. Once, in the next few days, to increase it by several hundred billion and then again in December to increase it further to carry the Treasury through 2022.  More specifically, it would mean that Democrats would have to vote for a debt limit of $29 trillion or so in the next few days, and then again for a debt limit of around $31 trillion in the next two months, at the same time they are trying to finalize their multi-trillion dollar fiscal package. From a political perspective, the only thing less attractive than voting to raise the debt limit to $31 trillion is voting to raise it to $29 trillion and then voting a second time to raise it to $31 trillion. 

It is possible that Democrats might take up this offer and that the Oct. 18 debt limit deadline will be pushed by a month or two.  That said, this should not be interpreted as a compromise and it might not change the situation. Instead, it might simply result in what had seemed like the most likely outcome all along, which is that Democrats use the reconciliation process to increase the debt limit just before the deadline after all they have exhausted all other options