U.S. Senate approves temporary lift of debt ceiling, averts default

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WASHINGTON (Businesshala) – The US Senate on Thursday approved legislation to temporarily increase the federal government’s $28.4 trillion debt limit and avoid the risk of a historic default this month, but a longer one until early December. Decided on the action to be taken.

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After weeks of partisan fighting, the Senate voted 50-48 to pass the bill. Earlier, 11 Republicans voted in favor of a procedural vote allowing the bill to proceed.

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The bill passed by the Senate now goes to the House of Representatives, which needs to be approved by President Joe Biden before it can be signed into law. The House will vote on the bill Tuesday, according to the office of No. 2 House Democrat, Steny Hoyer.

“President Biden looks forward to signing this bill as he walks through the House and arrives at his desk,” White House Press Secretary Jen Psaki said in a statement Thursday.

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“As we draw closer to the coming months, we anticipate that even more Republicans will join the Democrats in responsibly addressing debt limits rather than choosing to default or hinder.”

The $480 billion increase, which would raise the debt limit to $28.9 trillion, is expected to end by December 3, the same day that funding for most federal programs was a stop-gap measure passed earlier this month after another partisan standoff. ends under.

That means that over the next eight weeks, a bitterly divided Congress will face the twin challenges of finding a middle ground on agency spending by September 2022 — from education and foreign aid programs to immigration enforcement and airport security — and yet Avoiding another loan limit slump.

The vote brought the country closer to the October 18 date after a months-long standoff that the Treasury Department had predicted would no longer be able to meet its obligations.

Senate Majority Leader Chuck Schumer said after the vote, “Republicans played a dangerous and risky partisan game and I’m glad their potential didn’t work.”

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Top Senate Republican Mitch McConnell said the plan came to light on Wednesday, adding that Republicans were open to a temporary increase after Democrats twice blocked efforts to raise the cap. The motion comes as Biden raised the possibility of bypassing the Senate’s filibuster rule, which requires 60 out of 100 members to agree on most laws.

Not all Republicans were happy with McConnell’s move, and lengthy talks were held behind closed doors to secure enough Republican votes to push the measure.

“It’s a complete dedication,” said Republican Lindsey Graham.

Earlier in the day, news of talks ended Wall Street’s main stock indexes sharply higher in a broad-based rally. In a sign of relief in the bond market, yields on one-month Treasury bills fell to their lowest level since September 8 as investors believed the risk of default had eased.

reconciliation

Washington’s debt ceiling problems are unlikely to be resolved with the passage of a short-term increase.

McConnell is still expected to insist that the next increase in December would be achieved through a time-consuming “budget reconciliation” process that would allow it to pass without a vote from his party.

Doing so could strengthen Republican candidates in the 2022 congressional elections as they try to burnish their credentials as fiscal conservatives — even though most of them have previously used an array of measures passed during Republican Donald Trump’s administration. support, which reduced the US budget deficit.

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Democrats have strongly rejected using the conciliation process, though they have used it to pass some of Biden’s other priorities, saying it is too cumbersome in this case and would set a bad precedent.

Referring to the deal providing debt ceiling relief until December, McConnell said in a Senate speech: “There will be no question now. They (Democrats) have plenty of time to pass the next increase using reconciliation.” Will happen”.

Democrats were trying to pass legislation that would have raised the debt limit through the end of 2022, which Republicans blocked.

While the deal relieves debt ceiling pressure for now, it adds to the high-stakes, partisan battle that Congress will wage through the end of the year.

Democrats want to pass two big spending bills that make up Biden’s domestic agenda in the coming weeks, including a multi-trillion dollar social policy package to be passed by reconciliation and a $1 trillion bipartisan basic Structure Bill.

But by the end of November, their focus will have to return to funding the government and eschewing the debt cap again.

Reporting by Richard Cowan, Makini Bryce, Susan Cornwell and David Morgan; Additional reporting by Aishwarya Nair in Bengaluru; Editing by Scott Malone, Rosalba O’Brien, Leslie Adler and Michael Perry

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