Home ›› 11 Dec 2021 ›› World Biz
US senators voted Thursday to create a one-time law allowing Democrats to lift the nation’s borrowing authority and avert a disastrous credit default without requiring votes from the opposition Republicans.
The move allows Democratic-controlled Congress to lift the debt limit by a specific dollar amount with a simple majority in both chambers, meaning it can pass into law without Republican fingerprints on the hike.
“We still have a few more steps to take before we completely resolve this matter, but I am optimistic that after today’s vote we will be on a glide path to avoid a catastrophic default,” Democratic Senate Majority Leader Chuck Schumer said.
A debt limit increase would normally require 60 votes in the 50-50 split Senate, meaning Republicans, who are always keen to project themselves as fiscal conservatives, would have to chip in with votes in favor.
But the new law approved Thursday means the body can now pass solely with support from every Democrat and a tie-breaking “yea” from Vice President Kamala Harris.
Meanwhile, the Republicans can essentially stand on the sidelines, not blocking the Democrats but offering no votes themselves to raise the limit.
The compromise caps weeks of fraught negotiations and comes just days ahead of the deadline for the debt limit being reached.
Without action, the United States would no longer have been able to meet its debt repayment obligations soon after next Wednesday.
America spends more money than it brings in through taxation, so it borrows money by issuing government bonds, seen as among the world’s safest investments.
Around 80 years ago, lawmakers introduced a limit on how much federal debt could be accrued.
The ceiling has been lifted dozens of times to allow the government to meet its spending commitments -- usually without drama and with the support of both parties -- and stands at around $29 trillion. The final simple-majority House and Senate votes on raising the debt ceiling itself are expected early next week.
