Democrats, who tightly control the House, maintained party discipline to pass the hard-fought hike in the debt limit increase in a vote on Tuesday night, temporarily raising the government’s borrowing limit to 28 900 billion dollars.
U.S. Treasury Secretary Janet Yellen had warned that the United States would run out of cash to pay debts as early as Oct. 18, while economists and business leaders said a U.S. default would have devastating consequences for the global economy.
Earlier, House Majority Leader Steny Hoyer announced Tuesday’s vote saying, “It is blatant that our nation has been put in this place, but we must take immediate action to reduce the burden. debt ceiling and ensuring that U.S. confidence and credit remain intact. . “
The bill passed in the Senate last week after Republicans agreed to help Democrats overcome procedural hurdles. President Joe Biden is expected to sign it quickly.
The short-term extension will give the US Treasury the ability to issue debt to fund government operations until early December, but top Senate Republican Mitch McConnell has said his party will not help Democrats to adopt a longer term solution.
In a letter to Biden on Friday, McConnell wrote: “I will not participate in any future effort to mitigate the consequences of Democratic mismanagement.”
The dangers of a fault
If Congress does not extend the US debt limit, “global financial markets and the economy would be turned upside down, and even if resolved quickly, Americans would pay for this default for generations,” Moody’s Analytics warned in a recent report.
Democratic House Speaker Nancy Pelosi told reporters on Tuesday that she hoped there could be a future solution to the problem despite Republican opposition.
She said a Democratic proposal to allow the Treasury Department to lift the debt ceiling and give Congress the ability to cancel it “has merit.”
Meanwhile, Democrats who control a slim majority in the US Congress are struggling to advance Biden’s national agenda.
$ 1 trillion bipartisan infrastructure bill passed in Senate stalled in House, and Democratic senators failed to meet to support Biden’s proposed $ 3.5 trillion budget .
Pelosi said on Tuesday she was “disappointed” but expected the president’s plan to be reduced to around $ 2 trillion in proposed spending on climate, health care and jobs.
“We have some important decisions to make in the next few days so that we can continue,” Pelosi said.
In addition to resolving the debt ceiling, in early December, Democrats will also need to pass a funding law to avoid a government shutdown.
The months-long struggle for the debt ceiling is closely linked to the legislative elections of November 2022, when Republicans seek a majority in the House and Senate.
Democratic lawmakers fear that a Republican boycott of future efforts to raise the debt ceiling could expose them to advertisements of political attacks over the next year that accuse Democrats of tax evasion and contempt for the debt in rise.
But Democrats in turn accuse Republicans of being prepared to let the country default on its debts to score political points.
During the Trump administration, the debt limit was increased three times with the support of Democrats, despite their opposition to Republican initiatives that added to public debt like the 2017 tax reduction legislation and priorities of Trump like building a southwest border wall to prevent immigrants.