- The House of Representatives on Tuesday approved a bill to raise the US debt limit, the last legislative hurdle to avert a national default for the first time.
- The bill now goes to President Joe Biden’s desk for his signature and enactment. This would allow the Treasury Department to pay the country’s bills until early December.
- The legislation is the result of a deal between Congressional Democrat and Republican leader Mitch McConnell, and would raise the debt limit to $480 billion.
The House of Representatives on Tuesday approved legislation to raise the US debt limit, the last legislative hurdle to avert the first national default that would otherwise have been expected next week.
The bill, passed by the Senate last week, now goes to President Joe Biden’s table for his signature and enactment. He is expected to sign it later this week and possibly on Wednesday.
The legislation, which was approved by the House with a party-line vote of 219-206, is the result of a deal between Congressional Democrat and Senate Minority Leader Mitch McConnell, R-Ky., and would raise the debt limit to $480 billion.
The current national debt is $28.4 trillion and will be allowed to increase to about $28.8 trillion.
While the president is widely expected to sign the bill, failure to do so will result in economic disaster by October 18, Treasury Secretary Janet Yellen has warned.
The president’s top economic adviser told CNBC earlier in October that he would “absolutely expect” a US recession if the government ran out of ways to pay its bills and triggers an unprecedented default.
Debt limit suspensions or extensions do not authorize new government spending, but allow the Treasury Department to pay for appropriations that Congress has already approved.
House Speaker Nancy Pelosi, D-Calif., said during a press conference Tuesday morning that the debt limit extension is expected to allow the government to cover its expenses until at least December 3. Some recent reports suggest the $480 billion increase could push Congress into December.
Ed Mills, policy analyst at Raymond James, said even if the so-called drop-dead date is later in December, it won’t mean much to lawmakers.
Mills explained Tuesday morning that McConnell devised a $480 billion plan to force Congress to address the debt ceiling again before the legislature breaks down for the holidays.
“It is structured in such a way that the debt limit should be settled to the greatest extent possible in December,” Mills said when reached by phone.
“Is it later in December? Is it early January? It’s semantics at that point,” he continued. “When Congress is done in December, they want to go home and not come back on a ticking time bomb of an issue.”
The debt-limit agreement between McConnell and Senate Majority Leader Chuck Schumer, D.N.Y., came as a breakthrough after weeks of talks.
Republicans want Democrats to pass the long-running borrowing limit increase through budget reconciliation. The reconciliation would allow Democrats to pass the debt limit increase with a simple majority vote and bypass a GOP filibuster.
The downside for Democrats is that the reconciliation would force them to hand over a dollar figure for the debt limit and make them accountable for an outsized portion of the national debt before the 2022 midterm elections.
The GOP also argues that raising the limit should be up to Democrats as the Biden administration is attempting to use the same process to pass trillions in climate and anti-poverty spending.
If McConnell stands by his threat to withdraw Republican support, Democrats will have little choice but to reconcile as the Senate is split 50-50.
Most bills require at least 60 votes in the Senate, thanks to the threat of a filibuster. Nevertheless, the settlement on the borrowing limit comes as a relief to both the parties.
Democrats have bought themselves months to settle their intraparty disagreements over their multitrillion-dollar health, education and climate package and pass a parallel infrastructure bill in the House.
Republicans believe a short-term ceiling deal will force Democrats to increase debt limits in December.
McConnell last week extended his agreement with Democrats to claim that, as of December, Biden, Schumer and House Speaker Nancy Pelosi, D-Calif., will be unable to claim that they have both debt limits and their policy agenda. Lack of sufficient time to manage.