The U.S. Senate failed Saturday to achieve cloture for a “clean” increase of the debt ceiling, prompting Senator Chuck Schumer (D-N.Y.) to warn that markets may panic when they reopen on Monday.
“We don’t know when the markets will react to this,” Sen. Schumer said after the vote failed. “You can’t say no sooner than next Thursday. I worry on Monday that when the American markets open, maybe because of this vote, that they will start worrying.”
“Then not only will the stock market go down, but the interest rates will go up, and the value of U.S. Treasuries decline. It’s very serious. It would have been a whole lot better if we had just put this aside and a 100-0 vote to pay our bill. That didn’t happen,” he said.
Sen. Schumer’s remarks differ slightly from Treasury Secretary Jack Lew, who said markets wouldn’t start worrying until at least a day or two before the October 17 deadline.
The Senate rejected Saturday a proposal by Sen. Susan Collins (R-Me.) that called for a six-month continuing resolution that would have kept sequestration cuts in place and repealed the medical device tax.
“The good news is that the meeting that Senator [Harry] Reid (D-NV) and I had with Senator [Lamar] Alexander (R-TN) and Senator [Mitch] McConnell (R-KY) give me a little bit of cause for optimism,” Sen. Schumer said.
“Clearly the talks are in their early stages. I believe Senator McConnell showed good will. I believe he wants to come to a solution. I believe he knows how serious it is to default. And my view is that it will be the Senate that will have to come to an agreement here, because the House Republicans seem so divided, and in such disarray. They don’t have a plan,” he said.
The Senate will reconvene Sunday afternoon. The U.S. House of Representatives will not meet until Monday.
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