Biden signs debt limit hike, but December standoff looms

Thursday's signing by President Joe Biden of a bill to increase the nation's debt limit to early December delayed the possibility of a federal default that could cause economic catastrophe.

Biden signs debt limit hike, but December standoff looms

After the Senate had approved it last week on a party line vote, the Senate passed the $480billion increase in the country’s borrowing limit on Tuesday. After a long standoff with Senate Republicans who obstructed initial Democratic efforts with filibusters, delays that require at least 60 votes, the Senate finally approved it.

A few Senate Republicans joined Democrats to vote to end GOP delays, move to a final voting on the legislation. However, Minority Leader Mitch McConnell said that Republicans would not support another increase in December.

Janet Yellen, Treasury Secretary, had warned that Monday's U.S. borrowing limit would be reached. This unprecedented situation was something she and others warned could cause economic disaster for a nation still recovering from a pandemic. Routine payments to Social Security beneficiaries, disabled veterans, and active-duty military personnel could be delayed. The economic fallout in America could ripple across global markets.

The short-term debt limit increase passed ensures that the U.S. will meet its obligations for the time being. It does however create a potential cliff at year's end -- when lawmakers will be trying to pass a federal funding bill in order to avoid a government shutdown.

Republicans suggested that Democrats should use a budgetary maneuver in order to pass an increase of the debt limit without Republican support. This is similar to the process Democrats use for Biden’s massive climate change and Social Safety Net plan. However, Democrats have rejected this option. Congress is left without a clear solution for December's default deadline, though the White House insists it is still seeking a bipartisan increase.

Both parties' lawmakers have used the debt limit votes to push for their other priorities. Nancy Pelosi, the House Speaker threatened to vote against raising debt ceiling while President Donald Trump was in office. She stated that she did not intend to support lifting debt ceiling to allow Republicans to give another tax cut to the wealthy. In 2011, Republicans coerced President Barack Obama to accept $2 trillion in deficit reductions as a condition of increasing the debt limit. However, some of those cuts were reversed by lawmakers.

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