House passes debt limit increase to avoid default, sends bill to Biden
Nancy Pelosi, the US House Speaker (D-CA), speaks with reporters at her weekly news conference held on Capitol Hill in Washington. September 23, 20, 2121.
Elizabeth Frantz | Reuters
Tuesday’s approval by the House of Representatives of legislation to increase the U.S. Debt Limit was the last legislative hurdle in preventing a national default, which is what had been expected to happen next week.
After being passed last week by the Senate, the bill now heads to President Joe Biden’sto be signed and for enactment. It’s likely that he will sign the document later in this week.
This legislation was passed by the House on a party-line vote 219 to 206. It is the result of an agreement made between Senate Minority Leader and congressional Democrats Mitch McConnellR-Ky., which would raise the debt ceiling to $480billion.
Current national debt amounts to $28.4 Trillion and could rise to approximately $28.8 Trillion.
Although the president is expected to sign it, if he fails to do so by Oct. 18, Treasury Secretary would be responsible for economic disaster. Janet YellenThe warning was issued.
CNBC heard from the top economic adviser to President Obama earlier this month, that she believed it was a good idea. would “fully expect” a U.S. recessionIf the government runs out of money to pay its bills, it could trigger an unprecedented default.
Suspending or extending the debt ceiling does not allow for new spending. However, it allows the Treasury Department to reimburse Congress for any appropriations that have been approved.
The government will be able to meet its obligations at least until December 3, House Speaker Nancy Pelosi of California, stated Tuesday in a press conference. According to recent reports, the $480 million increase might last Congress into December.
Ed Mills, Raymond James policy analyst said that lawmakers won’t be affected by the “drop-dead” date, even if it falls in December.
Mills said Tuesday that McConnell had created the $480 billion plan in order to get Congress to address the debt limit before the holiday break.
Mills, when reached via phone, stated “This structure is such that the December debt limit should be treated in December to as much extent as possible.”
Is it earlier in December? Are you referring to January 1st? “It’s semantics at this point,” he said. They’ll want to leave the ticking bomb issue behind and go home when Congress ends in December.
After many weeks of negotiations, McConnell and Senate Minority Leader Chuck Schumer reached an agreement on the debt limit.
Republicans demand that Democrats pass budget reconciliation to increase the borrowing limit for a more long-term amount. A reconciliation would enable Democrats to pass the debt limit increase with a simple majority vote, and bypass a GOP filibuster.
The problem for Democrats is that reconciliation may force them to add a dollar to the debt limit and cause them to appear to be responsible for a large portion of the nation’s debt before the midterm elections in 2022.
Additionally, the GOP argues that Democrats should be responsible for extending the limit. The Biden administration is trying to do the same thing to increase climate spending and reduce poverty.
McConnell will continue to threaten withwithholding Republican support. Democrats won’t have other choices than reconciliation since the Senate splits 50-50.
Due to the possibility of filibuster, most bills in the Senate need at least 60 votes. A compromise is possible on the borrowing cap to provide relief for both sides.
Democrats get a few months to settle intraparty disputes over the multitrillion dollar climate, health and education package.
Republicans think the Democrats will be bound by the December debt ceiling hike agreement if they sign a short-term deal to fix their deficit.
McConnell stated last week, when he extended his compromise to Democrats, that by December 1, Schumer, Biden and House Speaker had been reached. Nancy PelosiD-Calif. won’t be able claim that they did not have sufficient time to handle both their debt limit and policy agenda.