The House is expected to consider the bill early this week
Top Congress Democrats announced Monday that they would attach a measure to suspend the federal borrowing limit until the end of 2022 so the government could be funded in early December, setting off a high-stakes showdown with Republicans, Who had repeatedly threatened to protest. maneuver.
The House is expected to consider the bill earlier this week, as Democrats race to avoid a government shutdown in nine days and loan defaults sometime in mid-October, as well as a partisan $ 3.5 trillion draft tax and Expenditure bill.
What is the loan limit?
“Addressing the debt limit is about meeting obligations that the government has already made, such as the bipartisan emergency COVID relief law from December, as well as significant payments to Social Security recipients and our veterans,” said House Speaker Nancy Pelosi, D-Cal., and Senate Majority Leader Chuck Schumer, D.Y., said in a joint statement.
Still, the bill faces an uphill battle to pass: Democrats hold a modest majority in both houses of Congress, and Republican has vowed to block any legislation suspending the country’s $28 trillion debt limit. Democrats would need to secure the support of at least 10 GOP lawmakers in the Senate to defeat a filibuster.
After Pelosi and Schumer’s announcement, Senate Minority Leader Mitch McConnell, R-Ky., said, “We will not support legislation raising the debt ceiling.” “Democrats don’t need our help.”
The fight to raise the government’s borrowing limit carries huge risks to the broader economy: With debt totaling $28.5 trillion, the government will be forced to reduce federal aid programs unless the cap is suspended or removed. Is.
President Biden has argued that Democrats joined with three-time GOP lawmakers trump administration to suspend limits, and that the rising deficit is due in large part to approved spending under his predecessor, including the $900 billion coronavirus relief package that lawmakers approved last December. He argued that the broad do And the spending package Democrats are still preparing will be fully paid for.
“This is a bipartisan responsibility, as was the case under my predecessor,” Biden tweeted Monday. “Blocking it would be unforgivable.”
The Treasury Department began implementing so-called extraordinary measures to keep the government running after a debt limit of about $22 trillion was restored in August – about $6 trillion less than the actual level. treasurer Janet Yellen has told Congress that the federal government will run out of cash to pay its bills in October.
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Without Congressional action, the US could default on its debt sometime in October, potentially “economic disaster,” Yellen said in a recent Wall Street Journal op-ed.
If the US fails to raise or suspend the debt limit, it will eventually have to temporarily default on some of its obligations, which could be serious and negative. Economic Meaning. Interest rates are likely to rise, and demand for treasuries will decline; Even the risk of default can lead to an increase in the cost of borrowing.
Yellen wrote, “America never made a mistake. Not once.” “Doing so would likely create a historic financial crisis that would compound the damage of the ongoing public health emergency.”