U.S. Senate signs off on $2.5 trillion increase to debt ceiling

The U.S. Senate voted to raise the nation’s debt ceiling by $2.5 trillion, an amount intended to extend the government’s borrowing authority until early 2023.

The 50-49 party line vote sends the legislation to the House, where Majority Leader Steny Hoyer said he planned to hold a vote Tuesday and send it to President Joe Biden for his signature.

“Responsible governing has won on this exceedingly important issue,” Senate Majority Leader Chuck Schumer said on the Senate floor before the vote. “The American people can breathe easy and rest assured there will not be a default.”

The current federal debt is $28.9 trillion, and Treasury Secretary Janet Yellen has warned that the government could have difficulty meeting its obligations after Dec. 15, though outside analysts have said the government has a bit more time.

The Senate acted as a result of legislation Congress approved last week establishing a one-time process to fast-track the measure by shielding it from the threat of a GOP filibuster in the 50-50 Senate and allowing it to pass with a simple majority.

Congress added $480 billion to the U.S. debt ceiling in October after weeks of partisan sniping that unnerved investors. This time, Schumer and Minority Leader Mitch Mcconnell agreed on a process that allows the debt ceiling to be lifted without any Republicans having to vote for it.

The increase was made possible after 14 Republicans last week voted to advance a one time provision allowing a debt ceiling increase without a filibuster.

“Democrats have wanted to transform the country alone. They want to print and borrow trillion after trillion on their own. They want to create even more inflation on their own. So, as Republicans have made clear for months, they will have to own a debt ceiling increase as well,” Mcconnell said last week.

Sen. Dick Durbin, the No. 2 Democrat in the chamber, said the $2.5 trillion figure was part of the agreement with Republicans to set up the simple-majority vote.

The bill’s passage sets up another showdown on the debt ceiling as soon as November 2022. If Democrats lose their majority in the midterm elections they may try to raise the ceiling again to avoid Republicans holding it hostage for spending cuts once Republicans take over.

Boosting the debt limit will allow the Treasury to replenish its depleted stockpile of cash and remove the risk of non-payment for government securities.