(Bloomberg) — Senate Majority Leader Chuck Schumer plans Wednesday to hold a vote in his chamber whether to take up a measure approved by the House that would suspend the nation’s debt ceiling until December 2022. Republicans promise to block him.

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Schumer’s attempt will mark his third try in nine days, amid a partisan stand-off over how to address the Treasury’s looming deadline for running out of cash. Without legislative action, the department will be forced to default on federal obligations. Treasury Secretary Janet Yellen has said the so-called x-date will be around Oct. 18.

President Joe Biden and congressional Democrats have called on Republicans to stop blocking a vote on addressing the debt ceiling and allow the majority party to pass a bill averting what Yellen has repeatedly warned would be a catastrophic event for the U.S. economy and global financial markets.

Senate Minority Leader Mitch McConnell and fellow GOP lawmakers have called on Democrats to increase the debt limit through reconciliation — the filibuster-bypassing process Democrats are using for a multi-trillion dollar social-spending bill vehemently opposed by Republicans. Democratic lawmakers say that process is too cumbersome to deal with the issue in time to avert damage to the economy and markets.

Key Stories and Developments:

  • The Senate plans on Wednesday to try proceeding with a debt-limit bill

  • The options lawmakers and policy makers have to avert default

  • See this QuickTake explainer on the debt ceiling

All times are Eastern Daylight:

Manchin Rejects Axing Filibuster for Debt Limit (11:54 a.m.)

Democratic Senator Joe Manchin made clear he will block any effort to carve out an exception to the chamber’s filibuster rule in order to bypass Republican opposition to raising the federal debt limit.

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Some other Democrats say they would support modifying the filibuster to deal with the debt ceiling, but Manchin’s opposition shuts down any chances of using that tactic.

“We are not going to default as a country,” Manchin said. But the West Virginia Democrat called any speculation that he would give way on the filibuster “theatrics.” — Erik Wasson and Laura Litvan

Investors Mull Options in Extreme Case of Default (11:30 a.m.)

While options markets seem not bothered by the ongoing debt-ceiling drama, Barclays Plc is warning investors to be prepared.

In a recent note to clients, strategists including Maneesh S. Deshpande wrote that a debt ceiling impasse could be a tail risk event for equity markets, and said the chance of a U.S. default is now “greater than at any point over the past decade.”

One irony of any default is that Treasuries might actually do well in the aftermath, market participants said. Analysts predict that — in similar fashion to some of the past debt-limit battles that went down to the wire before being resolved, such as in 2011 or 2013 — investors will snap up Treasury notes and bonds in a safe-haven play to hedge potential for a broad-based risk-off move upon a crisis. — Emily Graffeo, Liz McCormick and Lu Wang

Austin, Former Defense Chiefs Warn on Security (11:27 a.m.)

Defense Secretary Lloyd Austin said a failure to raise the U.S. debt limit would “seriously harm” U.S. service members and their families, as well as undermine “the economic strength on which our national security rests.” His message was echoed by a letter to congressional leaders by six of his predecessors, from both Republican and Democratic administrations.

Austin said a default “risks undermining the international reputation of the United States as a reliable and trustworthy economic and national security partner.”

“If we default on the “full faith and credit of the United States,” it will send a signal to our friends and our adversaries that America does not keep its word to our military forces,” the six former defense chiefs wrote. “We can hardly think of a more damaging message in an era of global instability and the rise of great power competition.”

The six signatories were William Perry, William Cohen, Leon Panetta, Chuck Hagel, Ashton Carter and James Mattis. — Bill Faries

White House Warning Sent to Small Businesses (11:11 a.m.)

The White House is warning that a default on the debt would have “significant and meaningful” repercussions on small businesses as interest rates rise.

In a Wednesday memo to small business groups and owners, the White House notes that small business loans could become costlier and that even Small Business Administration-guaranteed would become more expensive, since they reflect market conditions. — Jennifer Epstein

McConnell Offers Help to Speed Raising Debt Limit (11:21 a.m.)

Senate Minority Leader Mitch McConnell on Wednesday indicated Republicans would be willing to speed a raising of the debt ceiling if Democrats agree to use the cumbersome budget reconciliation process to do so.

He said both parties could come to a deal on scheduling to allow the debt ceiling to be raised with just Democratic votes well before the Treasury Department’s Oct. 18 deadline to act.

“In the last few days, Democrats in both the House and Senate have publicly admitted their party could handle the debt limit that way,” McConnell said on the Senate floor. “Our colleagues have plenty of time to get it done before the earliest projected deadline. There would be potential for time agreements to wrap it up well before any danger.”

Some Democrats have said they are out of time to use the multi-step budget process to raise the debt ceiling without Republican votes and instead are trying to get 10 Republicans to vote later Wednesday to end unlimited debate on a debt ceiling bill using the normal legislative process.

Addressing the debt ceiling using reconciliation would likely force Democrats to specify a dollar amount of debt to raise it by, rather than simply suspending it to December 2022 as the party wishes, and it would set up an unlimited amendment process on the floor where the minority can force politically tough votes. An agreement with McConnell could limit the scope and time of that amendment process. — Erik Wasson

Some Democrats Eye Temporarily Axing Filibuster for Debt Ceiling (10:53 a.m.)

Some Senate Democrats are discussing the option of a short-term elimination of the Senate’s filibuster rule — which requires 60 votes to cut off debate — in order to increase the debt limit after President Joe Biden said the maneuver it is “a real possibility.”

The idea, which would allow Democrats to pass debt limit legislation without Republicans, would need the support of all 50 senators who caucus with Democrats to vote to temporarily repeal the filibuster. However, Democratic Senators Joe Manchin and Kyrsten Sinema both have repeatedly said they oppose altering the Senate’s filibuster rule.

Senator Bob Casey, a Pennsylvania Democrat, who supports eliminating the filibuster to increase the debt ceiling, said he doesn’t know how many other Democrats would go along with the idea.

Senate Banking Committee Chair Sherrod Brown, an Ohio Democrat, told reporters Wednesday that it is imperative for the chamber to act this week. “We believe things are about to happen — the credit rating, what’s happened with the stock market. McConnell is playing with fire and he doesn’t care,” he said.Senate Minority Leader Mitch McConnell has said Democrats should use the budget reconciliation process, which can also lift the debt ceiling with Democratic votes alone. Democrats have opposed this idea saying it would take too long, though Republicans say there is still time to go that route. — Laura Litvan and Erik Wasson

Debt-Ceiling’s Market Risks ‘Seem Moderate,’ JPM’s Barry Says (9:34 a.m.)

Given that the financial system is flush with cash, current debt-ceiling risks “seem moderate,” JPMorgan strategist Jay Barry said Tuesday during an event at the Brookings Institution.

“We’re at about a five relative to a 10 in 2011 and 2013 because we haven’t seen it propagate out the yield curve,” Barry said during a panel discussion. — Alexandra Harris

Estimate Sees Treasury Out of Cash by Nov. 2 Latest (9:12 a.m.)

The Bipartisan Policy Center, a Washington think tank, now projects that the Treasury Department will exhaust its extraordinary measures to avert breaching the debt limit between Oct. 19 and Nov. 2.

That compares with the Treasury Department’s estimate of around Oct. 18, and a previous BPC calculation of Oct. 15 to Nov. 4.

“Even leading up to October 19, the Treasury Department will find itself with dangerously low cash levels. An unexpected event during that time frame could escalate into a financial crisis,” Shai Akabas, BPC’s director of economic policy, said in a statement Wednesday.

White House Warns of ‘Maelstrom’ in Case of Default (7:45 a.m.)

White House Council of Economic Advisers Chair Cecilia Rouse warned that a default by the Treasury could quickly evolve into a global financial crisis and a recession.

“If the United States does default, the consequences could escalate rapidly and profoundly. The timeframe of these impacts is unclear, since the United States has never defaulted,” Rouse and fellow members of the CEA wrote a blog post Wednesday. Unlike the aid deployed during the pandemic, limits placed by the debt limit mean “the federal government could only stand back, helpless to address the economic maelstrom,” they wrote.

Among those who could be affected by the disruption to federal payments are the following, the CEA said:

  • 50 million people receiving Social Security retirement benefits

  • 60 million on Medicare

  • 75 million enrolled in Medicaid

  • 42 million receiving Supplemental Nutrition Assistance Program money

  • 60 million recipients of child tax credits

  • 30 million children receiving school lunches

Biden to Meet With CEOs to Highlight Risk of Debt Default (7:28 a.m.)

President Joe Biden will meet Wednesday with financial and corporate leaders at the White House to highlight the potential damage to the U.S. economy from a debt default as lawmakers continue brinkmanship over the debt limit, according to a White House official.

Several chief executive officers are expected to attend including Citigroup Inc.’s Jane Fraser, Bank of America Corp.’s Brian Moynihan and JPMorgan Chase & Co.’s Jamie Dimon.

Dimon will be among those participating virtually. He’s not planning to weigh in on the specific legislative vehicle that should be used to address the debt limit, according to a person familiar with the matter. — Jennifer Epstein, Hannah Levitt

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