Members of Congress are rushing back to Washington on Tuesday to pass a short-term increase in the nation’s debt ceiling, ensuring that the federal government can pay its obligations in full until December.
Last week, the Senate passed a $480 billion increase in the country’s borrowing cap on a party-line vote. President Joe Biden is likely to sign it into law this week if the House approves it quickly.
Treasury Secretary Janet Yellen had warned that efforts to avoid a debt default would be expended by Monday, and that the department will soon be unable to completely pay the government’s financial commitments.
A default would have massive ramifications for global financial markets, which are based on the foundation of US government debt. The government’s regular payments to Social Security recipients, handicapped veterans, and active-duty military members would be jeopardized.
“It is terrible that our country has been placed in this position,” said House Majority Leader Steny Hoyer, D-Md., “but we must take urgent action to address the debt limit and guarantee the full faith and credit of the United States remains intact.”
However, the bill’s approval will only give temporary respite, requiring Congress to revisit the matter in December, when legislators will also be working to finalize federal funding legislation in order to prevent a devastating government shutdown. The year-end backlog poses dangers for both parties and threatens to bring Biden’s first year in office to a turbulent conclusion.
When Senate Republican leader Mitch McConnell, R-Ky., agreed to assist approve a short-term increase, the current stalemate over the debt ceiling was eased. He vows, though, that he will not do so again.
Democrats will have to handle the next debt-limit rise on their own, according to McConnell, who wrote to Biden on Friday, using the same procedure they used to approve Biden’s big social spending and environment proposal.
Reconciliation permits legislation to be passed by the Senate with 51 votes instead of the usual 60. With her tiebreaking vote in the 50-50 Senate, Vice President Kamala Harris gives Democrats the control.
McConnell has attempted to link Biden’s huge federal government spending rise with the nation’s increasing debt load, despite the fact that the two are unrelated, and the debt ceiling will have to be extended or postponed regardless of whether Biden’s $3.5 trillion proposal passes.
“Your lieutenants on Capitol Hill now have the time and all the tools they said they lacked to handle the debt ceiling through independent reconciliation,” McConnell wrote. “They can’t manufacture a new problem and expect me to help.”
McConnell was one of 11 Republicans who voted with Democrats to bring the debt ceiling reprieve to a vote in the Senate. Following that, McConnell and his Republican colleagues voted against the bill’s ultimate approval.
An agreement on a short-term remedy was reached quickly. Threats from Democrats to abolish the 60-vote barrier for debt ceiling votes — which Biden termed a “serious possibility” — were believed to have influenced McConnell’s decision.
Sen. Ted Cruz, R-Texas, stated, “I understand why Republican leadership blinked, but I wish they hadn’t.”
The debt ceiling is currently set at $28.4 trillion. Both parties have added to the burden by making decisions that have resulted in the government rarely functioning in the black.
Because of the disastrous consequences of default, politicians have been able to strike an agreement to lift or suspend the debt ceiling 18 times since 2002, typically after several rounds of brinkmanship.
According to a recent analysis by Moody’s Analytics, “global financial markets and the economy would be upended, and even if addressed swiftly, Americans would suffer for this default for years.”