Senate votes to raise debt limit by $2.5T, avoiding default

PTI, Dec 15, 2021, 8:12 AM IST

Image credit: Pixabay

Washington DC: The Senate approved legislation Tuesday to lift the nation’s debt limit by $2.5 trillion under a deal struck between party leaders, defusing a volatile issue until after next year’s midterm elections while saddling majority Democrats with a tough vote. T

he 50-49 party-line vote came just one day shy of a deadline set by Treasury Secretary Janet Yellen, who warned last month that she was running out of maneuvering room to avoid the nation’s first-ever default. The measure now moves to the House where a vote could come as early as Tuesday night, sending it to President Joe Biden’s desk.

“This is about paying debt accumulated by both parties, so I’m pleased Republicans and Democrats came together,” Senate Majority Leader Chuck Schumer, D-N.Y., said of the agreement, which created a workaround that allowed Democrats to avoid a Republican filibuster.

Despite a seemingly straightforward name, the nation’s debt limit does little to curtail future debt. Established in 1917, it instead serves as a brake on spending decisions already approved by Congress and the White House — some decades ago — that if left unpaid could cripple markets, send the economy into a tailspin and shake global confidence in the U.S. That hasn’t stopped Republican saber-rattling. For months, they’ve used the debt limit to attack Democrats’ big-spending social and environmental agenda while pledging to staunchly oppose the current effort to increase the threshold.

As recently as October, Senate Minority Leader Mitch McConnell said he would not ”be a party to any future effort to mitigate the consequences of Democratic mismanagement.” In striking a deal, McConnell backtracked on his word. But he also got much of what he wanted: Democrats taking a politically difficult vote without Republican support, while increasing the limit by a staggering dollar figure that is sure to appear in future attack ads.

“If they jam through another taxing and spending spree this massive debt increase will just be the beginning,” the Kentucky Republican said Tuesday.

The decision, however, has proven unpopular with some Republicans, particularly Donald Trump. The former president has railed against the deal repeatedly, calling McConnell a “Broken Old Crow” who “didn’t have the guts to play the Debt Ceiling card, which would have given the Republicans a complete victory on virtually everything.” “GET RID OF MITCH!” Trump said in a statement issued Sunday.

Republican Sen. Mike Lee of Utah also criticized the intricate process Schumer and McConnell agreed to, which he warned could be used in the future to “launder” potentially unpopular votes while bypassing the Senate’s normal mode of operation. Under the agreement, an amendment was made to an unrelated Medicare bill that passed last week with Republican voters. It created a one-time, fast-track process for raising the debt limit that allowed Democrats to do so with a simple majority, bypassing the 60 vote threshold to avoid a GOP filibuster.

Lee said the process was intended to make the Republican votes last week “appear as something other than helping Democrats raise the debt ceiling,” which he said Republican leadership “committed, in writing no less, not to do.” Yet Republican arguments against debt limit increases often ignore inconvenient facts.

The nation’s current debt load of $28.9 trillion has been racking up for decades. Major drivers include popular spending programs, like Social Security and Medicare, interest on the debt, and recent COVID-19 relief packages. But taxation is also a major factor, and a series of tax cuts enacted by Republican presidents in recent decades have added to it, too.

The national debt includes $7.8 trillion heaped onto the pile during Trump’s four-year presidency, an analysis of Treasury records shows. The GOP-championed 2017 tax cut is projected to add between $1 trillion and $2 trillion to the debt, according to the nonpartisan Tax Policy Center.