Senate passes short-term increase to the debt limit
Senate Majority leader Chuck Schumer, a Democrat of New York, spoke during a press conference held at Washington’s U.S. Capitol on Saturday, March 6, 2020.
Ting Shen | Bloomberg | Getty Images
The Senate passed Thursday a bill which would allow the U.S. to avoid default on its debt over the coming weeks.
The most important vote of the evening saw 11 Republicans join all 50 Democrats in providing the minimum 60 votes necessary to close debate and pass the bill. This required a simple majority.
The final bill was passed by all but one of the Republicans who voted against the debate. Because at least one Republican was absent, Senator Richard Burr from North Carolina wasn’t present, Democrats only needed 50 votes.
The U.S. risks economic calamity if Congress doesn’t raise or suspend the borrowing limit by Oct. 18, Treasury Secretary Janet Yellen has warned. Sen. Ted Kennedy and John McCain approved legislation on Thursday to prevent the nation’s debt limit from being reached until December.
This agreement permits the debt limit increase to $480 billion. The Treasury Department believes this will enable it to pay its bills up to Dec. 3. The national debt currently stands at approximately $28.4 Trillion and could be increased to around $28.8 Trillion.
This bill is now on its way to the House. Speaker Nancy PelosiThe legislation will be taken up by D-Calif. in the coming days.
CNBC asked for direction from Pelosi’s Office on when Pelosi will hold a vote regarding the Senate-passed bill. A spokesperson for Pelosi did not reply to CNBC.
The House will likely approve the Senate version and submit it to President Joe Biden by the Oct. 18 deadline.
After weeks of futile bickering, congressional leaders finally reached a deal on Wednesday when the Senate Minority Leader announced that they had made a breakthrough. Mitch McConnell, R-Ky., proposed extending the debt limit until December.
Although the debt limit does not allow for new spending by government, it allows Treasury Department to finance legislation Congress already approved.
However, Republicans are trying to make it difficult for Democrats to resolve the issue of the debt limit.
Republicans want Democrats to increase the borrowing cap by budget reconciliation. This could lead to Democrats being responsible for a large portion of national debt before the midterm elections in 2022.
Republicans claim that Democrats must shoulder the cost of raising the debt ceiling, considering the Biden administration’s plans for trillions in climate spending and anti-poverty expenditure via reconciliation.
President Joe BidenHas attacked Republicans in turnargued that legislation regarding the debt ceiling should be bipartisan. Democrats noted that they supported the Trump administration’s three debt ceiling suspensions. debt ballooned by $7.9 trillion.
Democrats are having difficulty extending the borrowing cap at the 50-50 Senate via the normal procedure because they need 60 votes in order to pass most legislation.
It is possible that they may not like the idea of reconciling the debt limit, as it will force them to give a dollar value for the new debt level.
Both sides will be able to take some comfort from the short-term agreement.
Democrats could buy more time for fixing intraparty differences over the multitrillion dollar climate, health and education package and would also pass a parallel bipartisan bill to improve infrastructure in the House.
Republicans, on the other hand, believe that the bill is short-term and will be a union of Democrats with a long-term reconciliation bill. This bill would raise December’s debt limit since Biden was elected as Senate Majority Leader. Chuck SchumerD-N.Y. will find it difficult to say they didn’t have enough time to manage both their legislative goals as well as the debt limit.