Solution to the US debt crisis
WASHINGTON (AP) — The Senate dodged a U.S. debt catastrophe Thursday night, voting to extend the government’s borrowing power through December and temporarily avoid an unprecedented federal default that experts say would devastate the economy. and would harm millions of Americans.
The 50-48 vote in favor of the bill to raise the government’s debt ceiling by nearly half a trillion dollars brought instant relief in Washington and far beyond. However, it only provides a reprieve. Assuming the House agrees, which it will, Republican and Democratic lawmakers will still have to address their deep differences on the issue once again before the end of the year.
This debate will take place as lawmakers also scramble to fund the federal government for the new fiscal year and continue their uphill battle over President Joe Biden’s top national priorities – a bipartisan infrastructure plan with nearly $550 billion. of new spending as well as a much larger $3.5 trillion effort focused on health, safety net programs and the environment.
To ease the current crisis — a disastrous default looming just weeks away — Republican Senate Leader Mitch McConnell of Kentucky offered his support for a short-term extension of government borrowing power after leading a strong GOP opposition to a longer extension. He acted as Biden and business leaders escalated concerns that a default would disrupt government payments to millions of Americans and plunge the nation into recession.
The GOP concession was not popular with some members of McConnell’s Republican caucus, who complained that the country’s debt levels are unsustainable.
“I cannot vote to increase this debt ceiling, not now, especially given the plans in play to increase spending immediately by an additional $3.5 trillion,” Utah Sen. Mike Lee said shortly. before the vote.
And Sen. Ted Cruz of Texas said Democrats were “on the road to surrender” on the process used to lift the debt ceiling, “and then unfortunately yesterday Republicans blinked.”
But Senator Lisa Murkowski of Alaska was among those who voted to push the bill forward.
“I don’t want to let this train fall off the cliff,” she said.
Congress has just days to act before the Oct. 18 deadline, after which the Treasury Department has warned it will quickly run out of funds to manage the country’s already racking up debt.
The House is expected to return to approve the measure next week.
Republican leaders worked all day to find the 10 votes they needed from their party to advance the debt ceiling extension to the final vote, calling a private meeting late that afternoon. It was a long and “spirited” discussion in the room, said Sen. Josh Hawley of Missouri.
McConnell cleared all views and eventually told senators he would vote yes.
The White House has signaled support for Biden, with senior deputy press secretary Karine Jean-Pierre saying the president would sign a bill to raise the debt ceiling when it passes Congress. Jabbling at Republicans, she also said, “It gives us some breathing room from the catastrophic default we were approaching because of Senator McConnell’s decision to play politics with our economy.”
Wall Street rallied modestly Thursday to the announcement of the agreement.
The deal sets the stage for something of a sequel in December, when Congress will again face pressing deadlines to fund the government and raise the debt ceiling before heading home for the holidays.
The $480 billion increase in the debt ceiling is the level the Treasury Department says is needed to safely arrive at Dec. 3.
“I thank my fellow Democrats for showing unity in resolving this Republican-made crisis,” said Senate Majority Leader Chuck Schumer of New York. “Despite immense opposition from Chief McConnell and his conference members, our caucus stood firm and we pulled our country off the edge of the cliff that the Republicans tried to pull us over.”
McConnell saw it quite differently.
“The path that our fellow Democrats have accepted will spare the American people any short-term crisis, while permanently resolving the majority’s excuse that they ran out of time to address the debt limit through (reconciliation),” McConnell said Thursday. “Now there will be no doubt: they will have plenty of time.
McConnell and his fellow Senate Republicans still insist that Democrats go it alone to raise the longer-term debt ceiling. Additionally, McConnell insisted that Democrats use the same cumbersome legislative process called reconciliation that they used to pass a $1.9 trillion COVID-19 relief bill and used to try to push through Biden’s $3.5 trillion measure to bolster safety net, health and environmental programs.
On Wednesday, Biden had enlisted top business leaders to push for the immediate suspension of the debt ceiling, saying the approaching deadline created the risk of a historic default that would be like a ‘meteor’ that could crush the US economy and send waves of damage around the world.
At a White House event, the president shamed Republican senators for threatening to obstruct any suspension of the $28.4 trillion cap. He relied on the credibility of American business – a group traditionally aligned with the GOP on tax and regulatory issues – to make his point as the heads of Citi, JP Morgan Chase and Nasdaq met in person and virtually to say the limit debt must be lifted.
“It’s not right and it’s dangerous,” Biden said of the resistance from Senate Republicans.
Once a matter of routine, raising the debt ceiling has become politically treacherous over the past decade or more, used by Republicans, in particular, to oppose government spending and rising debt. .