US Senate advances Bill to raise debt limit, avert catastrophic default

WASHINGTON (REUTERS) – The US Congress’ months-long drive to raise the federal government’s US$28.9 trillion (S$39 trillion) debt limit, and avert an unprecedented default, took a step forward on Thursday (Dec 9) as the Senate advanced the first of two Bills needed for the hike.

Fourteen Republicans joined the chamber’s 48 Democrats and the two independents who caucus with them in voting to end debate on the first Bill, spurning right-wing demands that they boycott any measure leading to an increase in the Treasury Department’s borrowing authority.

“I’m optimistic that after today’s vote we will be on a glide path to avoid a catastrophic default,” the chamber’s top Democrat, Majority Leader Chuck Schumer, said in a speech before the 64-36 vote on a measure he negotiated with Republican counterpart Mitch McConnell to speed passage.

Treasury Secretary Janet Yellen has urged Congress to raise the limit before Dec 15.

Republicans for months have been maneuvering to try to force Democrats to raise the debt limit on their own, seeking to link the move to President Joe Biden’s proposed US$1.75 trillion “Build Back Better” domestic spending Bill.

Democrats note that the legislation is needed to finance substantial debt incurred during Donald Trump’s administration, when Republicans willingly jacked up Washington’s credit card bill by about US$7.85 trillion, partly through sweeping tax cuts and spending to fight the Covid-19 pandemic.

The Senate could vote as early as Thursday evening to pass the first of two pieces of legislation needed to raise the borrowing limit to a still-under-negotiation amount intended to cover Washington’s expenses through the 2022 midterm elections that will determine control of Congress.

Democrats will need only a simple majority, including Vice-President Kamala Harris’ tie-breaking vote, to pass the two pieces of legislation and raise the debt limit.

A final vote, in the House of Representatives, is likely on Tuesday and President Joe Biden is expected to sign both bills into law once they pass.

‘Right thing to do’

Republican Senator Lisa Murkowski, who is up for re-election next year, told reporters that she voted to advance the first Bill because “It was the right thing to do.”

She added that at a time when Russia is amassing troops on its border with Ukraine, “we don’t need to be sending signals anywhere in the world that we’re not going to back the full faith and credit in the United States.”

The break in the legislative deadlock came just two months after Congress agreed on a short-term lift to the debt ceiling, to avert an unprecedented default by the federal government on its obligations, which would have dire implications for the world economy.

For years, lawmakers have squirmed over raising the statutory limit on the country’s growing debt, fearing voter backlash.

The emergence in 2010 of the conservative, small-government”Tea Party” movement increased the rancor in Congress over such legislation, even as lawmakers voted for tax cuts and spending increases that contribute to the debt.

The Bipartisan Policy Centre think-thank warned last week that the government could risk default by late this month if Congress does not act.

Democrats noted that they had voted in the past to authorise debt ceiling hikes to cover Republican measures, such as the Trump tax cuts.

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