The Senate on Tuesday passed a measure to raise the debt ceiling by $2.5 trillion, authorizing enough additional borrowing to fund critical government services for at least another year and clearing the way for Democrats to work on passing their massive social spending package, which faces an uncertain fate in Congress given opposition from spending-weary moderates.
The debt limit resolution passed the Senate in a party-line vote of 50 to 49, with Sen. Cynthia Lummis (R-Wy.) missing the vote due to sickness.
The bill now heads to a vote in the House, where lawmakers are expected to pass the measure after pushing it forward last week in a near-party-line vote of 222 to 212, with one Republican, Rep. Adam Kinzinger (Ill.), joining Democrats in support.
On the chamber floor shortly before the bill\’s passage, Senate Majority Leader Chuck Schumer (D-N.Y.) said he believed the $2.5 trillion increase was a “level commensurate with funding necessary to getting into 2023,\ meaning lawmakers may be able to avoid the thick of additional debt limit negotiations until after the midterm elections next year.
The resolution comes just one day before the funding deadline Treasury Secretary Janet Yellen set last month, when she warned lawmakers the Treasury would likely need the funding on Wednesday to pay $118 billion in highway funds authorized by the $1 trillion infrastructure bill, which President Joe Biden signed into law last month.
With debt limit legislation out of the chamber\’s hands, the Senate is now free to take up Biden\’s sweeping Build Back Better proposal, which Schumer and the White House have said they want to pass before Christmas.
Though Democratic party leaders have insisted they\’ll work to meet the looming deadline, Bank of America called the deadline \optimistic\ in a note to clients this week, adding that key provisions of the $1.8 trillion bill are still being negotiated among Democrats and will likely delay the legislation until early next year.
Ultimately, Bank of America forecasts the Senate will have to trim the bill down to about $1.5 trillion given opposition from Sens. Joe Manchin (D-W.Va.) and Kyrsten Sinema (D-Ariz.), who have declined to support the package over concerns about heightened inflation, a paid family leave provision, and state and local tax changes.
Following months of tense political infighting, House Democrats passed the Build Back Better Act last month in a party-line vote of 220 to 213. The plan, initially unveiled as a sweeping $3.5 trillion proposal in July, went through a round of massive cost cuts last month in an attempt to appease Manchin and Sinema. Many items in the framework call for lower spending than originally proposed in August. The child tax credit expansion, for example, was initially meant to last four years, instead of the slimmed-down one year. Other items have been removed completely, most notably two years of tuition-free community college for all Americans and a provision to create the first-ever federal benefit to guarantee paid work leave for family and medical reasons.
\Addressing the debt limit is a basic responsibility of the Federal government,\ Biden said Tuesday afternoon. \Passage of this legislation will allow the Treasury to finance spending and tax cuts Congress has already authorized and to keep its commitments without causing disruption or harm to our economy and American families.\
If Congress fails to raise or suspend the debt ceiling once the federal government hits its borrowing limit, the Treasury would be immediately impaired in carrying out its basic functions, such as providing financial assistance like Social Security. “It could take decades to recover,” White House economists said before the last deadline in October, pointing out roughly 56 million Social Security recipients may not receive their payments on time, or at all, in the event of a default.
Default Averted? Senate Passes Bill Allowing Democrats To Raise Debt Limit Without GOP Support (Forbes)
Yellen Says U.S. Could Run Out Of Cash By Mid-December If Congress Doesn\’t Raise Debt Ceiling Again (Forbes)
What\’s In Democrats\’ $1.8 Trillion Plan? Free Preschool, Child Tax Credit Expansion, $1.5 Trillion In New Taxes (For The Wealthy) And More (Forbes)