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Democrats Link Debt Limit to Vital Spending Bill, in Risky Move By Bloomberg


© Bloomberg. On Monday, September 20, 2021, the American flag flew above Washington, D.C., U.S.A. It is up to Speaker Nancy Pelosi’s ability to navigate deep Democratic divisions and make the many promises that she has made in order for the party’s progressive and moderate wings to move toward their goal. The fate of President Joe Biden’s economic agenda depends largely upon her success. Photographer: Ting Shen/Bloomberg

(Bloomberg) — House Democrats will include a suspension of the U.S. debt ceiling in a must-pass spending bill needed to keep the government open past the end of this month, in a risky move that assures a potentially damaging showdown with Republicans.

The debt ceiling will be temporarily suspended until December 2022. 

This decision will leave the U.S. poised for government shutdown, defaults on federal payments, and other repercussions if neither party changes its position. 

“This week, the House of Representatives will pass legislation to fund the government through December of this year to avoid a needless government shutdown that would harm American families and our economic recovery before the September 30th deadline,” House Speaker Nancy Pelosi and Senate Majority Leader Chuck Schumer said in a joint statement. “The legislation to avoid a government shutdown will also include a suspension of the debt limit through December 2022.”

The majority party aims to pressure Republicans into backing down on their threat to vote against a debt ceiling increase by attaching it to the stopgap bill, which would keep the government open. It includes money to aid victims of hurricanes and wildfires. This could make it harder for Senate Republicans not to support the bill.

The federal debt ceiling came back into effect, at $28 trillion, in August and the Treasury Department has warned that without congressional action it may run out of extraordinary accounting measures to avoid a payment default as soon as “sometime” in October. 

The plan of the Democrats to proceed if the Senate bill that combines spending with a debt-ceiling rise fails to pass is still unclear. At least 10 Republican votes are required to override a threshold of 60 votes for halting debate.

While the Democrats can raise the debt limit by themselves, they have not yet done so, saying that both the Democrats and Republicans are responsible for the debt. 

©2021 Bloomberg L.P.

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