House sends debt limit hike to Biden, staving off default

WASHINGTON (AP) – The House has approved a short-term increase to the nation’s debt limit, ensuring the federal government can continue fully paying its bills into December and temporarily averting an unprecedented default that would have decimated the economy.

The USD480 billion increase in the country’s borrowing ceiling cleared the Senate last week on a party-line vote.

The House approved it on Tuesday so United States (US) President Joe Biden can sign it into law this week.

US Treasury Secretary Janet Yellen had warned that steps to stave off a default on the country’s debts would be exhausted by Monday, and from that point, the department would soon be unable to fully meet the government’s financial obligations.

A default would have immense fallout on global financial markets built upon the bedrock safety of US government debt. Routine government payments to Social Security beneficiaries, disabled veterans and active-duty military personnel would also be called into question.

The Capitol building in Washington. PHOTO: AP

The relief provided by passage of the legislation will only be temporary though, forcing Congress to revisit the issue in December – a time when lawmakers will also be labouring to complete federal spending bills and avoid a damaging government shutdown. The yearend backlog raises risks for both parties and threatens a tumultuous close to Biden’s first year in office.

“I’m glad that this at least allows us to prevent a totally self-made and utterly preventable economic catastrophe as we work on a longer-term plan,” said Representative Jim McGovern.

Republicans signalled the next debt limit debate won’t be any easier and warned Democrats not to expect their help.

“Unless and until Democrats give up on their dream of a big-government, socialist America, Republicans cannot and will not support raising the debt limit and help them pave the superhighway to a great entitlement society,” said Representative Tom Cole.

Procedurally, the House took a single vote on Tuesday that had the effect of passing the Senate bill. The measure passed by a party-line vote of 219-206.

The present standoff over the debt ceiling eased when Senate Republican leader Mitch McConnell, agreed to help pass the short-term increase. But he insists he won’t do so again.

In a letter sent last Friday to Biden, McConnell said Democrats will have to handle the next debt-limit increase on their own using the same process they have tried to use to pass Biden’s massive social spending and environment plan. Reconciliation allows legislation to pass the Senate with 51 votes rather than the 60 that’s typically required. In the 50-50 split Senate, Vice President Kamala Harris gives Democrats the majority with her tiebreaking vote.