Democrat-controlled House of Representatives expected to approve bill increasing debt limit amid looming default.
Democrats in the US House of Representatives are set to approve a $480bn increase in the United States government’s borrowing limit, forestalling until December a reckoning with Republicans on the nation’s spending and debt.
A bill to boost the US debt limit to $28.9 trillion is scheduled for a vote on Tuesday evening, House Majority Leader Steny Hoyer announced.
“It is egregious that our nation has been put in this spot, but we must take immediate action to address the debt limit and ensure the full faith and credit of the United States remains intact,” Hoyer said.
US Treasury Secretary Janet Yellen had warned the US would run out of cash to pay its debts beginning as soon as October 18, while economists and business leaders said a US default would have devastating consequences for the global economy.
The bill was passed in the Senate last week after Republicans agreed to assist Democrats in overcoming procedural hurdles. President Joe Biden is expected to sign it into law quickly.
The short-term extension will give the US Treasury room to issue debt to fund government operations through early December, but top Senate Republican Mitch McConnell has said his party will not help Democrats pass a more long-term solution.
In a letter to Biden on Friday, McConnell wrote, “I will not be a party to any future effort to mitigate the consequences of Democratic mismanagement.”
If Congress fails to extend the US debt limit, “global financial markets and the economy would be upended, and even if resolved quickly, Americans would pay for this default for generations”, Moody’s Analytics warned in a recent report.
Democratic House Speaker Nancy Pelosi told reporters on Tuesday she hoped there could be a future solution to the issue despite Republican opposition.
She said a Democratic proposal to allow the Treasury Department to lift the debt ceiling, and give Congress the ability to overrule it, “has merit”.
Meanwhile, Democrats who control only a narrow majority in the US Congress are struggling to advance Biden’s domestic agenda.
A bipartisan, $1-trillion infrastructure bill that passed in the Senate is stalled in the House, and Democratic senators have been unable to come together to support Biden’s proposed $3.5 trillion budget.
Pelosi said on Tuesday she was “disappointed” but expected the president’s plan to be scaled back to about $2 trillion in proposed spending on climate, healthcare and jobs.
“We have some important decisions to make in the next few days so that we can proceed,” Pelosi said.
In addition to resolving the debt limit, in early December Democrats also will need to pass funding legislation to avert a government shutdown.