An increase in the debt ceiling is intended to prevent the US government from imminent default.
(Photo: dpa)
Washington By raising the debt ceiling, the US Senate has taken a decisive step to prevent an imminent government default. The Congress Chamber passed the increase on Tuesday with the vote of the Democrats. According to US media reports, they will enable the government to borrow $ 2.5 trillion in additional debt.
The House of Representatives, in which the Democrats also have a narrow majority, has yet to approve the increase. The Treasury Department last warned that the government could run out of money this week.
The government’s debt ceiling was last at $ 28.9 trillion, according to the Congressional Budget Office (CBO). The new debt would therefore result in an upper limit of $ 31.4 trillion – significantly more than the US economic output of a year. According to reports, the new credit line should be sufficient to finance government business until 2023. This would mean that the politically sensitive issue would not have to be voted on again before the congressional election in November next year.
Fed warned of global financial crisis
The Treasury Department had warned that a default in the world’s largest economy could trigger a global financial crisis and economic downturn. The political tussle about raising the debt ceiling has been dragging on for some time. The US Congress approved a US $ 480 billion increase in the debt ceiling in October to allow more time for a longer-term solution. The Republicans refused to support US President Joe Biden’s Democrats in this. Ultimately, they agreed to a process that would allow the Democrats to push through the Senate increase with a slim majority.
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US Treasury Secretary Janet Yellen said in November that she expected the US to default in mid-December if Congress does not raise the debt ceiling. After December 15, her ministry will no longer have sufficient funds to finance the government.
The vote on the bill passed with 50 to 49 votes along the party lines. Democrats and Republicans each have 50 seats in the Senate; If there is a stalemate, Vice President Kamala Harris has the casting vote.
Biden needs the debt ceiling to be raised to fund its trillion billion infrastructure, health, environmental and social programs.
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