The U.S. House of Representatives was set Tuesday to extend the government’s borrowing authority into early December, averting a first-ever default next week when the United States says it will run out of money to pay its bills.
The House vote to increase the existing $28.4 trillion debt total by $480 billion through December 3, following approval last week by the Senate, would send the legislation to President Joe Biden for his expected signature.
While the congressional votes and Biden’s approval resolve the immediate financial crisis for the government, the Democratic-controlled Congress and the White House have yet to agree on how to approve a long-term expansion of the borrowing authority, perhaps through almost all of 2022.
Senate Minority Leader Mitch McConnell secured enough votes of his fellow Republican senators last week to help Democrats pass the expanded borrowing authority in the short term but said he would not do so again as the December deadline approaches.
McConnell has called on Democrats to approve the debt ceiling on their own through a legislative process known as reconciliation, for which they would not need any Republican support. But Democrats say the process is cumbersome and time-consuming, leaving it uncertain how they will try to hike the borrowing authority come December.
The U.S., almost alone among world governments, has a debt ceiling, one it has adjusted about 70 times since 1965, either by increasing it to a specific figure or by suspending it for a year or two. The U.S. needs to borrow money, much as individual consumers might, because it chronically spends more than it collects in corporate and individual taxes.
U.S. Treasury chief Janet Yellen warned Sunday that it was “absolutely imperative” that Congress increase the country’s borrowing authority, even as the threat of an immediate default receded.
“It would be a catastrophe” if the United States does not increase the debt ceiling, Yellen told ABC’s “This Week” show.
Yellen had said the U.S. would run out of money to pay its bills next Monday. McConnell and 10 other Republicans voted to clear the path for Democratic senators to increase the government’s borrowing authority on a 50-48 party-line vote.
Senate Majority Leader Chuck Schumer said Republicans should join Democrats in raising the debt ceiling because the country’s long-term debt has increased under both Republican and Democratic control of the White House and Congress.
The borrowing authority provides money to pay bills for debt already incurred, not future spending. But Republicans have balked at helping Democrats raise the debt ceiling this time as a protest against Biden’s proposal to spend $2 trillion or more on the biggest expansion of the country’s social safety net programs in five decades.
Yellen has called for doing away with the debt ceiling, but that is unlikely since both Republican and Democratic lawmakers, thinking it is a winning political tactic, repeatedly blame each other for what they contend is wasteful and unneeded spending by their opponents.
“It should be a shared responsibility [to increase the debt ceiling], not any one party,” Yellen said. “It is Congress’ responsibility.”
“We have to reassure the world that the United States is fiscally responsible,” she said, adding that if the borrowing authority is not increased before December 3, it would amount to “a self-inflicted crisis.”
Yellen said if the debt ceiling is not increased, 50 million older Americans might not receive government pension benefits and that “our troops won’t know when or if they would be paid. The 30 million families that receive a child tax credit, those payments would be in jeopardy,” she said.