The US Senate has agreed to temporarily lift the country’s debt ceiling, averting a historic default that would have wreaked havoc on the economy, according to analysts.
Senators decided to raise the ceiling by $480 billion (£352 billion), covering the United States until early December.
Following weeks of political bickering, the measure was passed by a 50-48 vote.
The discovery came fewer than two weeks before the United States was due to become the first country in history to be unable to borrow money or repay loans.
The bill must now pass the House of Representatives before being forwarded to President Joe Biden for signature into law.
After Republican Senate leader Mitch McConnell expressed support for a short-term extension, the vote in the upper chamber took place.
Because Democrats control the White House and both chambers of Congress, Senate Republicans have previously claimed that increasing the debt ceiling is their “exclusive duty.”
They are irritated by fresh spending ideas that Democrats are attempting to pass without Republican backing, and Mr. McConnell tweeted last month that his party will “not allow another irresponsible, political taxing and spending spree.”
Senate Majority Leader Chuck Schumer, a Democrat, claimed Republicans had “played a reckless and hazardous political game” following the vote.
“What we need now is a long-term solution,” he continued, “so we don’t have to go through this dangerous drama every few months.”
Several top Republicans, though, slammed Mr. McConnell’s choice to work with Mr. Schumer. Senator Lindsey Graham of South Carolina termed the action “a total surrender.”
To avoid a default, US lawmakers will have to fix this issue by the new December deadline.
Experts predict that if the United States defaults on its obligations, it will seriously harm the country’s credit rating, throw the global financial system into chaos, and perhaps trigger a self-inflicted recession.
Explaining The Debt Ceiling
The United States government spends more money than it receives in taxes, therefore it borrows to make up the difference.
Borrowing is done through the US Treasury, which issues bonds. US government bonds are regarded as one of the safest and most trustworthy investments in the world.
Congress imposed a “ceiling” on the amount of debt the government may accumulate in 1939.
The debt limit has been raised over 100 times to allow the government to borrow additional money. It is frequently the topic of bipartisan action in Congress, and it is seldom the source of a political impasse.
However, several Republicans have expressed displeasure with new Democratic spending ideas.
Democrats have argued that increasing the debt ceiling is about paying off current debts rather than incurring new ones, and that President Biden’s policies have only contributed to 3% of existing debts.