US Senate approves rise in national debt ceiling to avoid default

Photo: archive, BGNES

The U.S. Senate approved by a 63-36 vote to raise the national debt ceiling, capping weeks of tough negotiations and removing the danger of the United States falling into insolvency (default) with catastrophic consequences. The bill was passed just four days before the deadline announced by the US Treasury Department to avoid default, the agencies reported.

The deal reached between Democrats and Republicans passed the Senate by a landslide 63-36 vote, a day after it also passed in the lower house of Congress, the House of Representatives.

“This is a great victory for the economy and the people of the United States,” the Democratic president said, adding that he would sign the final bill into law an hour later.

He noted that the previously reached agreements with the Republicans on raising the debt were compromises, but, in his words, they would allow his country to avoid falling into insolvency. “Nobody gets everything they want in negotiations,” the American president stated.

Economists warned that without such an arrangement, the US government would have run out of cash by Monday and become unable to pay its bills.

The bill is a compromise between President Biden, a Democrat, and Republicans, and would allow the existing $31.4 trillion U.S. national debt ceiling to be raised so that the government in Washington can borrow well into fiscal year 2024 and not become insolvent. But in return, Democrats and the president caved in to Republican demands that the US federal government cut budget spending.

Treasury Secretary Janet Yellen also welcomed the passage of the bill to raise the US debt ceiling and pointed out that if it had not been done, a possible US default would have put “millions of jobs and household savings at risk” to the tune of trillions of dollars’.

Chuck Schumer, the leader of the Senate Democrats, who hold the majority in that chamber, declared that “the nation can breathe a sigh of relief” because a “catastrophic” economic collapse had been averted.

The midnight drama followed a series of failed votes on amendments to the bill, mostly brought by Republicans, who at one point threatened to block the proceedings.

Some Republicans expressed displeasure with the bill’s allocation of defense money.

“The way this bill is written, it puts the military at a disadvantage. The first and most important dollars we set aside each year are for the defense of the United States and the protection of American interests,” said Sen. Lindsey Graham, R-South Carolina.

America spends more money than it collects in taxes, so it borrows by issuing government bonds, considered one of the safest investments in the world.

About 80 years ago, the U.S. legislature introduced a ceiling above which the government could not take on debt, but since then it has been raised more than 100 times, usually without much drama between Democrats and Republicans.
(BTA, Vladimir Sakhatchiev)