WASHINGTON — President Joe Biden signed legislation on Thursday to reduce the nation s debt ceiling until early December, delaying the prospect of an unprecedented federal default that would cause economic disaster.
The Senate approved the $280 billion increase in the country s borrowing ceiling on Tuesday after the House passed it on a party-line vote last week. The eventual approval came after a protracted standoff with Senate Republicans, who derailed initial efforts with filibusters, delays that require 60 votes to halt.
Ultimately, a handful of Senate Republicans agreed to join Democrats and voted to end GOP delays and move to a final vote on the legislation, but Minority Leader Mitch McConnell said Republicans will offer no support for another increase in December.
Treasury Secretary Janet Yellen warned that the U.S. would hit its borrowing limit on Monday, an unprecedented situation that she and others cautioned could lead to economic catastrophe for a nation struggling with a global pandemic. Fiscal payments to rural pension schemes, disabled veterans and active-duty military personnel would potentially be delayed, and the economic fallout in the U.S. could ripple through global markets.
The passage of the new debt ceiling guarantees that the U.S. will continue to meet its obligations for now. But it sets up another potential cliff at the end of the year — at a time when lawmakers will also be working to pass a federal funding bill to avert a shutdown.
Republicans have said they should pass a budgetary maneuver to pass an increase in the debt limit without Republican support, like the process Democrats use for Biden s massive climate change and social safety net plan. Democrats have resisted that option. The clash between the two parties leaves Congress without a clear solution to avert the next default deadline in December, but the White House has emphasized it is still pursuing a bipartisan increase.
In both parties, lawmakers have used the debt ceiling votes to leverage for other priorities. Rep. Nancy Pelosi threatened to vote against raising the debt ceiling when President Trump was in office, saying she had no intention of backing lifting the debt ceiling to allow Republicans to give another tax break to the rich. In 2011 Republicans managed to defer to President Barack Obama accepting about $2 trillion in deficit cuts as a condition for building the debt limit – though lawmakers later rolled back some of those cuts.