Speaker of the U.S. House of Representatives, Nancy Pelosi (D-CA), speaks to reporters at the weekly press conference on Capitol Hill in Washington, September 23, 2021.
Elizabeth Franz | Reuters
The House of Representatives approved legislation to raise the US debt ceiling on Tuesday, which is the final legislative obstacle to avoiding the first national default, which is expected to happen next week.
The bill was passed by the Senate last week and has now been sent to President Joe Biden’s desk for his signature and promulgation. He is expected to sign later this week and possibly on Wednesday.
The legislation passed the House of Representatives with a party vote of 219-206. It was the result of an agreement reached between Congressional Democrats and Senate Minority Leader Mitch McConnell (R-Ky.) and increased the debt ceiling by $480 billion.
The current national debt is 28.4 trillion U.S. dollars and will be allowed to increase to approximately 28.8 trillion U.S. dollars.
Treasury Secretary Janet Yellen warned that although the president is widely expected to sign the bill, failure to do so will lead to economic disaster on October 18.
The President’s top economic adviser told CNBC in early October that if the government cannot repay the bills and trigger an unprecedented default, she will “fully anticipate” a recession in the United States.
The suspension or extension of the debt ceiling does not authorize new government spending, but allows the Treasury Department to pay appropriations already approved by Congress.
Speaker of the House of Representatives Nancy Pelosi said at a press conference on Tuesday morning that the extension of the debt limit is expected to enable the government to pay for at least December 3. Some recent reports indicate that the $480 billion increase may continue into December.
Raymond James policy analyst Ed Mills said that even if the so-called deadline is later in December, it doesn’t make much sense for lawmakers.
Mills explained on Tuesday morning that McConnell had devised a $480 billion plan to force Congress to resolve the debt limit again before the legislature’s holiday break.
Mills said upon receiving the call: “This is a structure that needs to resolve the debt limit issue to the greatest extent in December.”
“Is it late in December? Is it early January? That was the semantics at the time,” he continued. “When Congress ends in December, they will want to go home instead of going back to a problematic time bomb.”
After several weeks of negotiations, a breakthrough was achieved in the debt limit agreement between McConnell and Senate Majority Leader Chuck Schumer.
Republicans want Democrats to pass a longer-lasting borrowing limit increase through budget reconciliation. The settlement will allow the Democrats to pass a simple majority vote to raise the debt limit and circumvent the Republican obstruction bill.
The downside for the Democrats is that the settlement will force them to allocate a dollar figure for the debt ceiling and make them appear to be responsible for a large portion of the national debt before the 2022 midterm elections.
The Republican Party also believes that the tedious work of extending restrictions should be undertaken by Democrats, because the Biden administration is trying to use the same process to pass trillions of climate and anti-poverty spending.
If McConnell insists that he rejects the threat of Republican support, the Democrats have no choice but to reconcile, because the Senate voted 50-50.
Due to the threat of obstructing the bill, most of the Senate bills require at least 60 votes. Nonetheless, a compromise on the borrowing ceiling may give both parties a sigh of relief.
The Democrats bought themselves a few months to resolve the party’s disagreements over their trillion-dollar health, education, and climate package and pass a parallel infrastructure bill in the House of Representatives.
Republicans believe that the short-term ceiling agreement will allow Democrats to raise the debt ceiling in December.
When extending his compromise to Democrats last week, McConnell claimed that by December, Biden, Schumer, and House Speaker Nancy Pelosi would not be able to claim that they did not have enough time to manage debt limits and policy agendas. .