Thanks to the profligate spending by Congress in recent years, the federal government was poised to reach and surpass its nominally self-imposed debt limit within a matter of days.
That potential financial crisis was averted this week, however, as both the Senate and the House passed a measure that increased the nation’s debt limit by roughly $2.5 trillion, Fox Business reported.
That lifting of the cap on how much debt the government can accrue is now set at about $31.5 trillion and, according to Treasury Secretary Janet Yellen, should suffice to cover what the nation owes and avoid a potential crisis-sparking default until some point in 2023 after the midterm elections are held and a new Congress is seated.
Biden signs bill to increase debt ceiling
According to a White House release Thursday morning, President Joe Biden signed the bill known as S.J. Res 33 into law, formally raising the debt limit by another $2.5 trillion.
In a post to Twitter, Biden said, “Today, I signed a bill raising our debt ceiling. Members of both parties came together to ensure that the federal government doesn’t default on past debts. Defaulting would be a catastrophe for our economy, and it’s a responsibility of governing to make sure we pay what we owe.”
Today, I signed a bill raising our debt ceiling. Members of both parties came together to ensure that the federal government doesn’t default on past debts. Defaulting would be a catastrophe for our economy, and it’s a responsibility of governing to make sure we pay what we owe. pic.twitter.com/vMQ1ZXSHpZ
— President Biden (@POTUS) December 16, 2021
The president’s quip about “members of both parties” coming together to raise the debt limit was a bit disingenuous, however, as the measure cleared both chambers almost exclusively along partisan lines, according to Fox Business. The final vote in the House was 221-209, with only Rep. Adam Kinzinger (R-IL) crossing the aisle to support the bill.
The tally over in the Senate was 50-49, and while no Republicans had voted in favor of the bill, Senate Republican Leader Mitch McConnell (R-KY) had worked out a deal with his counterpart, Senate Democratic Leader Chuck Schumer (D-NY), to bypass the Senate’s filibuster and the 60-vote requirement to advance a measure toward a final vote.
The debt limit explained
Forbes reported that the national debt limit is, for all intents and purposes, no different than the credit limit on the average American’s credit card, in that it caps how much the government is permitted to borrow in order to pay for its many obligations.
Unfortunately, that debt limit must be routinely increased — 17 times just since 2000 — because of the separate but related federal deficit, which is the amount of money spent annually by Congress in excess of the revenue that is brought in from taxpayers.
Had the debt ceiling not been lifted at this time, the U.S. Treasury was expected to run out of cash and be unable to not only continue paying its bills, for lack of a better term, but arguably more importantly, it would have been unable to pay the accumulating interest on the roughly $28 trillion debt already owed.
If that had happened, it likely would have caused massive turmoil in the stock market and, at the very least, seen the nation’s credit-worthiness downgraded, which in turn would have made it all the more expensive for everyone to borrow future funds at higher interest rates