President Biden on Thursday signed a bill raising the debt ceiling by $2.5 trillion, narrowly averting default on the nation’s debt.
On Tuesday, the measure passed the Senate in a 50-49 vote strictly along party lines after Democrats and Republicans reached a deal to sidestep the filibuster.
The House then moved to pass the bill late Tuesday in a larger gap vote, 221-209, with one Republican member voting in favor, sending it to Biden’s desk for his signature.
Treasury Secretary Janet Yellen warned Congress that the federal government could default on its debt soon on Dec. 15, without raising the debt limit.
This action will result in the U.S. being allowed to avoid default until at least 2023.
Despite pleas from officials and watchdogs about the disastrous consequences of defaulting, Republicans remained steadfastly opposed to supplying votes to raise the debt ceiling.
In response, Congress passed legislation last week to create a fast-track process to allow Democrats to raise the debt limit in the Senate without help from Republicans.
With the conversation of shutting down the government over the debt ceiling, it was expected that Democrats would raise the limit by an amount sufficient to ensure that the issue will not need to be addressed again until after the 2022 midterm elections.
Analysts had said a mild recession would likely be the ‘best-case scenario’ in the event of the U.S. government defaulting on its debts. The ‘worst-case scenario’ would have involved downstream effects of potentially cascading job losses, a shut down in tens of billions in Covid-19 economic recovery aid still set to be delivered, a near-freeze in credit markets along with gross domestic product taking a tangible hit that could last for multiple quarters.
The analysis also addressed the potential for failure to raise the debt ceiling. Which could have halted payments that millions of Americans rely on, including paychecks to federal workers, Medicare benefits, military salaries, tax refunds, Social Security checks, and payments to federal contractors.
With the debt-ceiling, we are pulling from two strings and hoping to get a good outcome. On one end, we are trying to ensure we stay out of a recession, fighting to get away from our hyperinflation and stabilize the market. On the other end, we are dramatically increasing our debt ceiling, offering and passing trillions of dollars worth of Build Back Better and infrastructure plans, and using tax-payer dollars. Only time will tell our chance of success.