US Congress averts default with stop-gap debt limit hike

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WASHINGTON: US lawmakers approved a short-term bill on Tuesday to lift the nation’s borrowing authority, avoiding the threat of a first debt default, but only for a few weeks.
The one controlled by the Democrats House of Representatives voted along party lines to approve the provisional $ 480 billion hike, which was advanced from the Senate last Thursday after weeks of heated debate.
“It’s about the kitchen table, it’s about our economy, the global economy, but it’s also about our constitution, which says America’s full faith and credit will not be in question,” said the president of the Democratic House. 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 family wealth, as well as rising costs for mortgages and other loans.
Republicans refused to offer their own votes to avoid the crisis, and even prevented the Democrats who control Congress from lifting the limit on their own, through a simple majority.
But the party abandoned its lockdown on the Senate last week, ending for now a dead end that risked leaving the federal government unable to obtain and repay loans after Oct. 18.
The new arrangement simply kicks the can down the road, possibly to complicate another important funding deadline: a shutdown that would begin on December 3, when government coffers are theoretically depleted.
However, the debt limit may be less pressing.
Economists estimate that the nation will reach the new revised debt limit sometime in mid-December or early January, a little later than the December 3 date that Congress originally projected.
The United States spends more money than it collects through taxes, so it borrows money through the issuance of government bonds, considered among the most reliable investments in the world.
About 80 years ago, legislators introduced a limit on the amount of federal debt that could be accumulated.
The ceiling has been raised dozens of times to allow the government to meet its spending commitments, generally without drama and with the support of both parties, and stands at around $ 28 trillion.
But Republicans in both houses of Congress have objected this time, saying they refuse to support Biden’s “reckless” tax and spending plans.
In reality, raising the debt ceiling does not authorize new spending; it simply pays the expenses that the Republican and Democratic administrations have already committed to.
“This is about meeting the obligations that the government has already entered into, including bipartisan relief from Covid or legislation passed last year,” Pelosi said.
“Only three percent of the current debt that we are addressing here has been incurred during the Biden years.”
The absurdity of regularly risking a recession, not to mention America’s credit rating and the stability of other major economies, over partisan bickering has not been lost in Congress.
Pelosi was asked Tuesday about a growing clamor for the decision to raise the party politics debt ceiling on Capitol Hill and hand it over to the Treasury.
“That seems to have some appeal for both sides of the aisle because of the consequences for people of not lifting it,” he 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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