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U.S. Senate approves temporary lift of debt ceiling, averts default

EconomyOct 07, 2021 11:47PM ET
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2/2 © Reuters. The sun sets behind the U.S. Capitol building in Washington, U.S., October 6, 2021. REUTERS/Leah Millis 2/2

By Richard Cowan and Makini Brice

WASHINGTON (Reuters) - The U.S. Senate approved legislation on Thursday to temporarily raise the federal government's $28.4 trillion debt limit and avoid the risk of a historic default this month, but put off until early December a decision on a longer-lasting remedy.

The Senate voted 50-48 to pass the bill following weeks of partisan fighting. Earlier, 11 Republicans voted in favor of a procedural vote allowing the bill to proceed.

The Senate-passed bill now goes to the House of Representatives, which needs to approve it before President Joe Biden can sign it into law. The House will hold a vote on the bill on Tuesday, according to the office of the No. 2 House Democrat, Steny Hoyer.

"President Biden looks forward to signing this bill as soon as it passes the House and reaches his desk," White House press secretary Jen Psaki said in statement on Thursday.

"As we approach the coming months, we hope that even more Republicans will join Democrats in responsibly addressing the debt limit instead of choosing default or obstruction."

The $480 billion increase, which would lift the debt limit to $28.9 trillion, is expected to be exhausted by Dec. 3, the same day that funding for most federal programs expires under a stop-gap measure passed earlier this month following another partisan standoff.

That means that over the next eight weeks, the bitterly divided Congress will have the twin challenges of finding a middle ground on agency spending through September 2022 -- ranging from education and foreign aid programs to immigration enforcement and airport security -- and avoiding yet another debt limit meltdown.

The vote followed a months-long standoff that brought the nation close to the Oct. 18 date that the Treasury Department forecast as when it would no longer be able to meet its obligations.

"Republicans played a dangerous and risky partisan game and I am glad that their brinksmanship did not work," Senate Majority Leader Chuck Schumer said after the vote.

The plan emerged on Wednesday after top Senate Republican Mitch McConnell said Republicans were open to a temporary hike after twice blocking Democrats' attempts to raise the cap. That offer came after Biden raised the possibility of bypassing the Senate's filibuster rule requiring 60 of the 100 members to agree on most legislation.

Not all Republicans were happy with McConnell's move, and it took long negotiations behind closed doors to secure enough Republican votes to advance the measure.

"This is a complete capitulation," said Republican Lindsey Graham (NYSE:GHM).

Earlier in the day, news of the negotiations drove Wall Street's main stock indexes to end sharply higher in a broad-based rally. In a sign of bond market relief, the yield on one-month Treasury bills fell to the lowest point since Sept. 8 as investors deemed that the risk of default had eased.

RECONCILIATION

Washington's debt limit troubles are unlikely to be resolved with passage of the short-term increase.

McConnell is still expected to insist that the next increase in December be achieved through the time-consuming "budget reconciliation" process, which would allow for passage without any votes from his party.

Doing so could bolster Republican candidates in the 2022 congressional elections as they try to burnish their credentials as fiscal conservatives - even though most of them previously supported an array of measures passed during Republican Donald Trump's administration that jacked up U.S. budget deficits.

Democrats have adamantly rejected using the reconciliation process, although they have used it to pass some of Biden's other priorities, saying that in this case it is too unwieldy and would establish a bad precedent.

Referring to the deal providing a debt limit reprieve until December, McConnell said in a Senate speech: "Now there will be no question. They'll (Democrats) have plenty of time" to pass the next increase using reconciliation.

Democrats had been trying to pass legislation that would have raised the debt limit through the end of 2022, which Republicans blocked.

While the deal relieves debt ceiling pressures for now, it adds to the high-stakes, partisan battles Congress will wage through the end of the year.

Democrats want to pass two massive spending bills that make up much of Biden's domestic agenda in the coming weeks, including a multi-trillion-dollar social policy package to be passed by reconciliation and a $1 trillion bipartisan infrastructure bill.

But by late November, their attention will have to return to funding the government and again avoiding the debt ceiling.

U.S. Senate approves temporary lift of debt ceiling, averts default
 

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Comments (15)
Steve Wayne
Hadrian Oct 08, 2021 2:03AM ET
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It's funny the party out of power always seems to care so much about debt.
Jo Pa
Jo Pa Oct 08, 2021 12:47AM ET
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If you can't meet spending obligations, then stop increasing your spending!
Bronson Naab
Bronson Naab Oct 08, 2021 12:47AM ET
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Agreed. Buy we have to pay for Trump’s reckless deficit spending.
Alan Rice
Alan Rice Oct 08, 2021 12:47AM ET
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Stop with the common sense, huh ??
king michael
king michael Oct 07, 2021 10:47PM ET
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Tax and inflation will have to go a lot higher for generations.
Josh Davis
Josh Davis Oct 07, 2021 10:47PM ET
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You can bet your nominal tax bracket will double percentage wise during your working career. When i started in 2005 it was only 15% now im paying 25%.
Nelgybtc Dnyjec
Nelgybtc Dnyjec Oct 07, 2021 8:55PM ET
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worthless fks.. ought hang all of em.
Dominic Mazoch
Dominic Mazoch Oct 07, 2021 8:54PM ET
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Next Novembet, if canidate does not have an I by his or her name, and is notva true I, I will not vote for the person. Ifvtheir are no I's for the position, I will vote for no body.
Doug Favell
Doug Favell Oct 07, 2021 8:52PM ET
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Everything Soetoro, ahhh, I mean Biden touches turns to s hit.
Green Mango
Green Mango Oct 07, 2021 4:38PM ET
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These pampered snot nosed elites think that their job is quote painful???
ZS Beck
ZS Beck Oct 07, 2021 2:57PM ET
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Not enough .3.5 T $ social spending and another 1T infrastructure, We need to raise the limit a little higher then that. 480? By Christmas need to do it again. Better of to give everybody a 1M $ and let's the party begin
jason xx
jason xx Oct 07, 2021 2:57PM ET
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New spending has absolutely 0 to do with the debt ceiling
jason xx
jason xx Oct 07, 2021 2:57PM ET
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You know trump added 8 trillion to the deficit right and has nothing to show for it? Enough to pay for bidens bills 2X... and only the super rich have anything to show for it.
Co Gonz
Co Gonz Oct 07, 2021 2:57PM ET
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jason xx you know how much was for covid?
Co Gonz
Co Gonz Oct 07, 2021 2:57PM ET
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didn't take class on fiscal policy? it would impact debt future payments- so it does impact debt ceiling
Bronson Naab
Bronson Naab Oct 07, 2021 2:57PM ET
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Theresa Scott before COVID hit, Trump had already DOUBLED the annual deficit…and created fewer jobs in his first three years than Obama’s finsl three years. Facts…a NYC Con Man’s kryptonite.
Nelson Manning
Nelson Manning Oct 07, 2021 2:52PM ET
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it's easy just say NO
Ron Moorman
Ron Moorman Oct 07, 2021 11:33AM ET
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The debt ceiling is increased, but yet our politicians want to spend trillions of dollars we do not have. Continuing to spend money we do not have is not sustainable.
Bronson Naab
Bronson Naab Oct 07, 2021 11:33AM ET
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Exactly what I’ve been saying as Trump blew up our annual deficits. He doubled it before COVID even hit.
Pratt Man
Pratt Man Oct 07, 2021 11:05AM ET
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Without and filibuster, voters votes would actually matter and stuff would get done based on what the voters want. ******the filibuster and save America.
James Pattison
James Pattison Oct 07, 2021 11:05AM ET
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Voters votes dont matter until the threshold of security is raised in elections…
James Pattison
James Pattison Oct 07, 2021 11:05AM ET
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Inflation is going to crush the middle and lower wage earners… but maybe thats what democrats want… a permanent underclass
Pratt Man
Pratt Man Oct 07, 2021 11:04AM ET
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Our founding fathers made it hard to pass laws by requiring voters to fill two houses of Congress and the white House with the same party. That was their filibuster. There is no 60% requirement on the constitution. The filibuster must be challenged as unconstitutional.
Josh Davis
Josh Davis Oct 07, 2021 11:04AM ET
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If you love liberalism why havent you moved to a liberal country like venezuela, myanmar? Etc ?
Rodolfo Barraco
Rodolfo Barraco Oct 07, 2021 9:29AM ET
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killing fillibuster is ****democracy. wellcome to totalitarian dictatorship of the party in power. no more check and balances... winers takes all.
James Pattison
James Pattison Oct 07, 2021 9:29AM ET
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And those who chest the hardest win elections
jason xx
jason xx Oct 07, 2021 6:16AM ET
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Buys congress more time. I guess all year wasn't long enough. This refusal to cooperate is going to be the death of this country eventually
Junk Man
Junk_Man Oct 07, 2021 6:12AM ET
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All US policy is a can kicked down the road... Neither party can or wants to work together for the country. Both parties are about themselves and reelection....
 
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