US Congress Avoids Default With Interim Debt Limit Raised


Washington, (UrduPoint / Pakistan Point News – October 13, 2021): U.S. lawmakers on Tuesday approved a short-term bill to lift the country’s borrowing power, avoiding the threat of a first-ever default – but only for a few weeks.

The Democratic-controlled House of Representatives voted party-friendly to adopt the interim $ 480 billion hike, which advanced from the Senate last Thursday after weeks of heated debate.

“It’s about the kitchen table, it’s about our economy, about the world economy, but it’s also about our constitution which says that the full faith and credit of the United States must not be in doubt, ”Democratic House Speaker Nancy Pelosi told reporters before the vote.

Democratic leaders had spent weeks highlighting the havoc a default would have caused, including the loss of six million jobs and $ 15 trillion in household wealth as well as rising costs of mortgages and more. loans.

Republicans refused to offer one of their own votes to avoid the crisis, and even prevented Democrats who control Congress from lifting the limit themselves, via a simple majority.

But the party lifted its blockade in the Senate last week, for now ending a deadlock that risked leaving the federal government unable to guarantee and repay loans after October 18.

The new arrangement only kicks the box, perhaps to complicate another major funding deadline – a shutdown that would start from December 3, when government coffers are theoretically depleted.

– “Full faith and credit” – The borrowing limit may however be less pressing.

Economists estimate that the country will hit the new revised debt limit in mid-December or early January, a little later than the December 3 date originally set by Congress.

The United States spends more money than it collects through taxation, so it borrows money through the issuance of government bonds, considered one of the most important investments. reliable in the world.

About 80 years ago, lawmakers introduced a limit on the amount of federal debt that could be accumulated.

The cap has been lifted dozens of times to allow the government to meet its spending commitments – usually without drama and with support from both sides – and stands at around $ 28 trillion.

But Republicans in both houses of Congress opposed this time around, saying they refused to support Biden’s “reckless” tax and spending plans.

In reality, raising the debt ceiling does not authorize new spending – it only pays for spending that the Republican and Democratic administrations have already committed to.

“This is about meeting obligations the government has already taken on, including bipartisan relief from Covid or legislation passed last year,” Pelosi said.

“Only three percent of the current debt that we are discussing here was incurred during the Biden years.” House Democrat Marcy Kaptur criticized the “theater” of Republicans opposing the lifting of the debt ceiling.

“Republicans have decided they don’t want to pay their bills and are prepared to derail the country’s economy in the process,” she said on Twitter.

Conservative Republican Chip Roy said he voted against the bill because such an increase in the debt ceiling would be used to advance “government-funded tyranny.” The absurdity of regularly risking a recession – let alone the credit rating of the United States and the stability of other major economies – over partisan bickering has not escaped Congress.

Pelosi was asked on Tuesday over growing clamor for the decision to raise the debt ceiling away from party politics on Capitol Hill and give it to the Treasury.

“It seems to have some appeal on both sides of the aisle because of the consequences for people not to lift it,” she said.

“Many, many Democrats and Republicans have voted against lifting the debt ceiling, but never (before) to the point of jeopardizing it.”


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