Senate avoids debt default
Debt ceiling will be raised temporarily
WASHINGTON: The US Senate approved legislation on Thursday that pulls the nation from the brink of a payment default with a short-term debtceiling increase, breaking a weeks-long standoff that rattled financial markets.
The vote was 50-48, with no Republicans in favour of the measure that simply kicks the can toward another precarious debt-limit fight in less than two months. The US$480 billion increase in statutory borrowing would run out around Dec 3.
The debt limit increase still needs a vote in the House, which has been on break. But Majority Leader Steny Hoyer said on Thursday night that representatives would return on Tuesday. The measure is expected to be approved in that chamber. President Joe Biden “looks forward to signing this bill as soon as it passes the House and reaches his desk”, White House Press Secretary Jen Psaki said.
“Republicans played a risky and partisan game, and I am glad their brinkmanship didn’t work,” Senate Majority Leader Chuck Schumer said after the bill cleared a procedural hurdle.
Sen Schumer and Minority Leader Mitch McConnell struck a deal for the legislation earlier on Thursday. News of the accord early sparked a rally in the stock market. The S&P 500 charted a third day of gains as the chances of an economically devastating tightening in fiscal policy abated — at least for now.
The timeline sets up a collision course where various fiscal and policy battles will play out roughly simultaneously. Funding for government operations also expires on Dec 3, risking a government shutdown unless lawmakers can complete agency budgets for this fiscal year. Also, Democrats could be trying to push through Mr Biden’s
broad economic package around that time.
Sen McConnell had to work up until almost the last minute to get a sufficient number of Republicans to vote for a procedural motion — called cloture — to cut off debate and advance the debt ceiling legislation to the floor. In the end, Mr McConnell and 10 other Republicans voted to clear the way for the bill.
In a foreshadowing of the pitched battle in store in December, Mr McConnell faced blowback from some members of his party, who said he had caved to the Democrats and others who didn’t want their fingerprints on the deal as they face possible primary challenges next year.
Senator Ted Cruz of Texas, who doesn’t face election until 2024, blasted Sen McConnell’s deal with Sen
Schumer as a “a mistake”.
“We were all standing together and making clear that Democrats had complete authority to raise the debt ceiling, and to take responsibility for the trillions of debt that they are irresponsibly adding to this country,” Sen Cruz said.
“Schumer was on the verge of surrender. And unfortunately, the deal that was put on the table was a lifeline for Schumer.”