The capital city of the United States is home to Congress can now move quickly to avoid a first-ever federal default after the Senate on Thursday cleared its final major obstacle to raising the debt ceiling. This effectively ends the Republican blockade.
An overwhelming majority of the House of Representatives (64-36) agreed to move forward with legislation that would make it easier and faster for Congress to raise the statutory borrowing limit by an as-yet-undetermined amount. When Republicans refused to allow Democrats to take up any long-term debt ceiling increase and used the filibuster to block their efforts, the action broke months of politically charged Senate wrangling.
McConnell, the Republican minority leader and Minority Leader, struck a deal on a convoluted process this week with leading Democrats that would allow the borrowing cap to be raised on a simple majority vote—with only Democrats in favor—rather than subjecting it to the 60-votes-or-less threshold that applies to most major legislation.
In the face of criticism from fellow Republicans and activists, Mr. McConnell voted in favour of it, despite a chorus of condemnation from those in his own party. It could be signed into law by Vice President Biden as early as Thursday evening, if all goes according to plan.
A vote to raise the debt ceiling by as much as $2.5 trillion, expected early next week, would open the door for that vote. It puts Congress on the fast track to avoid a fiscal crisis. The Treasury Department has warned that it may be unable to meet the government’s obligations if it exceeds the statutory debt limit before December 15.
To entice Republicans who have been reluctant to give Democrats the ability to raise the debt ceiling, the measure was packaged with legislation that would delay scheduled cuts to Medicare, farm aid, and other mandatory spending programmes. It would remove the threat of a filibuster or other procedural hurdles that would allow Republicans to block its passage by establishing a one-time, fast-track path for the Senate to raise the debt limit by a specific amount.
Sen. Chuck Schumer, the New York Democrat and majority leader, said he was pleased that the “responsible action will be taken today to facilitate a process that avoids a default.” “The nation’s debt has been incurred on a bipartisan basis,” he said. Mr. McConnell’s “fruitful, candid and productive” discussions were credited for the agreement.
In his closing remarks, Senator Schumer expressed optimism that today’s vote would put the country on a course to avoid a catastrophic default.
With no specifics on how much the borrowing cap will rise, it is expected that Democrats will delay another fiscal cliff until after the 2018 midterm elections.. According to a person familiar with the preliminary accounting, a Treasury estimate suggested that they would need to raise it by as much as $2.5 trillion to cover that period.
The Republicans’ refusal to budge on the debt ceiling necessitated the wrangling in Congress. Republican demands for a similar fast-track budget reconciliation process, which shields legislation from a filibuster, were rejected by Democrats because they are already using it to push through Mr. Biden’s $2.2 trillion climate, tax, and social spending bill over their opposition.
Democrats reacted angrily, claiming that raising the borrowing limit to cover spending approved and incurred by both Republican and Democratic administrations was the responsibility of both parties. It would be a waste of time and effort, they said, to go through the process of reconciliation.
By breaking his own party’s filibuster on a short-term increase in the debt ceiling, Mr. McConnell relented temporarily in October, enlisting the support of 10 of his colleagues. However, he made it clear to Vice President Biden in a scathing letter that he would not do so again.
Later, McConnell and Schumer began quietly discussing alternatives, including the possibility of attaching a debt limit increase to annual defence policy bill, the last piece of legislation that must be passed through Congress before year’s end.
Become familiar with the US Debt Ceiling.
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What’s the debt ceiling, exactly? There is a limit on the total amount of money that the federal government can borrow via US Treasury bills and savings bonds in order to meet its financial obligations, known as the debt ceiling or debt limit. The United States is forced to borrow enormous sums of money to pay its debts because of its budget deficits.
We limit our borrowing because… Congress is required by the Constitution to approve borrowing. It was established in the early 20th century so that the Treasury didn’t need permission each time it needed to issue bonds for payment of debts.
What would happen if the debt ceiling was exceeded? Inaction on the debt ceiling could lead to a self-inflicted economic recession and a financial crisis, Janet Yellen warned Congress in her testimony. She also warned that a failure to raise the debt ceiling could result in delays in Social Security payments for millions of Americans.
Is it the same in other countries? A debt limit is in place in Denmark, but the limit is set so high that raising it isn’t a big deal. The majority of other countries do not share this viewpoint. Public debt in Poland is limited to no more than 60% of GDP.
What other options do we have in place of a debt ceiling? In part, the debt ceiling has persisted due to the absence of a replacement. A bill to abolish the debt ceiling, which Ms. Yellen characterised as “destructive,” would be supported by her. The debt ceiling must be abolished by a vote of the House of Representatives.
Tuesday, congressional leaders announced the deal, which passed in the House of Representatives with the support of all but one Republican.
They accused McConnell and his allies of caving and warned that the move would set a dangerous precedent, which could weaken Senate filibuster rules, which have long been used to protect minorities. Several Republicans were furious.
This certainly sets in motion playing with Senate rules in a manner that I never even thought of until 24 hours ago,” said South Carolina Republican Senator Lindsey Graham. “I want to make this difficult, not simple, because I believe that what we’re doing will fundamentally alter the Senate’s structure and inflict significant harm on the GOP.”
That didn’t stop Mr. McConnell from getting support from his leadership team, as well as from centrists, and retiring legislators. They promised to use the vote as a political weapon in this year’s midterm elections if Democrats took the final vote to increase the limit.
The decision to delay mandatory cuts to a variety of federal spending programmes, including community block grants, farm aid, and a 4% reduction in Medicare payments to doctors and hospitals, may have persuaded a few Republicans as well. As a result, doctors and hospitals will be able to keep their current Medicare pay rates until April before the cuts begin to take effect, as long as the legislation is signed into law.
