House adopts debt limit increase to avoid default, sends bill to Biden

U.S. House of Representatives Speaker Nancy Pelosi (D-CA) addresses reporters during her weekly press conference on Capitol Hill in Washington, September 23, 2021.

Élisabeth Frantz | Reuters

The House of Representatives on Tuesday approved legislation to raise the US debt limit, the latest legislative hurdle to avert a very first national default that is otherwise expected to occur next week.

The bill, passed by the Senate last week, is now traveling to President Joe Biden’s office for signature and passage. He is expected to sign him later this week and possibly Wednesday.

The legislation, which cleared the House with a party line vote of 219-206, is the result of an agreement between Congressional Democrats and Senate Minority Leader Mitch McConnell, R-Ky., And would extend the debt ceiling of $ 480 billion.

The current national debt is $ 28.4 trillion and could reach about $ 28.8 trillion.

While the president is generally expected to sign the bill, failure to do so would result in economic calamity by October 18, warned Treasury Secretary Janet Yellen.

The president’s chief economic adviser told CNBC earlier in October that she would “fully expect” a recession in the United States if the government ran out of money to pay its bills and triggered an unprecedented default.

Debt ceiling suspensions or extensions do not authorize new government spending, but allow the Treasury Department to pay off appropriations that Congress has already approved.

Extending the debt limit should allow the government to cover its spending at least until Dec. 3, House Speaker Nancy Pelosi, D-Calif., Said at a press conference on Tuesday morning. . Some recent reports suggest the $ 480 billion increase may last longer in Congress until December.

Even if the so-called deadline is later in December, it won’t mean much to lawmakers, said Ed Mills, policy analyst at Raymond James.

Mills explained Tuesday morning that McConnell devised the $ 480 billion plan to force Congress to tackle the debt limit again before the legislature recess for the holidays.

“This is structured so that the debt limit is dealt with in December whenever possible,” Mills said when reached by phone.

“Is it later in December? Is it early January? It’s semantics then,” he continued. “When Congress is finished in December, they’ll want to go home and not come back to a ticking time bomb of a problem.”

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The debt limit deal between McConnell and Senate Majority Leader Chuck Schumer, DN.Y., was a breakthrough after weeks of negotiations.

Republicans want Democrats to adopt an increase in the longer-term borrowing limit through budget reconciliation. The reconciliation would allow Democrats to pass an increase in the debt limit with a simple majority vote and bypass a GOP obstruction.

The downside for Democrats is that reconciliation will force them to put a dollar figure on the debt ceiling and make them appear responsible for a disproportionate portion of the national debt ahead of the 2022 midterm election.

The GOP also argues that the drudgery of extending the limit should fall on Democrats as the Biden administration attempts to use the same process to spend trillions of dollars in climate and anti-poverty spending.

If McConnell maintains his threat to deny Republican support, Democrats will have few options other than reconciliation as the Senate is split 50-50.

Most bills in the Senate require at least 60 votes thanks to the threat of filibuster. Nevertheless, a compromise on the borrowing limit is probably a relief for both parties.

Democrats are giving themselves a few months to settle their inter-party disagreements over their multibillion-dollar health, education and climate package and pass a parallel infrastructure bill in the House.

Republicans believe the short-term cap deal will force Democrats to raise the debt cap in December.

McConnell claimed in extending his compromise to Democrats last week that, by December, Biden, Schumer and House Speaker Nancy Pelosi, D-Calif., Won’t be able to pretend they haven’t had enough. time to manage both the debt limit and their political agenda.

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