US senators vote to avert calamitous debt default
Dec 15, 2021 - 06:19 AM
WASHINGTON — The US Senate voted Tuesday to raise the federal debt limit, moving the country a step closer to eliminating the threat of a calamitous credit default — just one day ahead of the deadline set by the Treasury.
The deeply divided upper chamber of Congress voted to raise the borrowing cap by $2.5 trillion and the House is expected to follow suit later in the day — staving off the next showdown until at least 2023.
“No brinksmanship, no default on the debt, no risk of another recession: responsible governing has won on this exceedingly important issue,” Senate Majority Leader Chuck Schumer said on the floor ahead of the vote.
“The American people can breathe easy and rest assured there will not be a default.”
The vote in the 50-50 split Senate followed party lines, but Democratic Vice President Kamala Harris was not required to cast a tie-breaking ballot as one Republican was absent.
Both parties see raising the debt ceiling as politically toxic.
Republicans especially hope to weaponize the extension to campaign against Democratic “overspending” in the 2022 midterm legislative elections, although it would only cover commitments already made by both parties.
The two sides agreed last week to create a one-off law allowing Democrats to lift the nation’s borrowing authority without help from the opposition Republicans.
The legislative sleight-of-hand circumvented the “filibuster” rule, so that the required 60-40 margin could be abandoned for this vote only, in favor of a simple majority — allowing Republicans essentially to stand on the sidelines.
‘A basic responsibility’
The Bipartisan Policy Center, an independent Washington-based think tank, expects the United States would no longer be able to meet its debt repayment obligations sometime after December 21, although Treasury Secretary Janet Yellen put the deadline at Wednesday.
America spends more money than it collects through taxation, so it borrows money via the issuing of government bonds, seen as among the world’s most reliable investments.
Around 80 years ago, lawmakers introduced a limit on how much federal debt could be accrued.
The ceiling has been lifted dozens of times to allow the government to meet its spending commitments — usually without drama and with the support of both parties — and stands at around $29 trillion.
The new borrowing cap will be $31.5 trillion.
Democratic leaders have spent weeks underlining the havoc that a default would have wrought, including the loss of an estimated six million jobs and $15 trillion in household wealth, as well as increased costs for mortgages and other borrowing.
“Addressing the debt limit is a basic responsibility of the federal government,” the White House said in a statement.
“Passage of this legislation will allow the Treasury to finance spending and tax cuts Congress has already authorized and to keep its commitments without causing disruption or harm to our economy and American families.”