(RepublicanPress.org) – On October 7, the Senate approved legislation temporarily raising the federal government’s debt limit to avoid a historic default later in the month. The Senate barely managed to pass the measure along partisan lines by a vote of 50 to 48. The Democratic-led House managed to indirectly approve the bill using a parliamentary trick.
Raising the Debt Ceiling
On Tuesday, October 12, House Speaker Nancy Pelosi (D-CA) and her slim Democratic majority adopted a procedural rule by a 219 to 206 vote along partisan lines providing approval of the Senate bill. The rule covered House floor debate procedures for unrelated measures. However, the provision automatically approved the Senate’s move to extend the government’s debt limit.
— One America News (@OANN) October 13, 2021
Unfortunately, the move by Senate and House Democrats only provides a temporary solution to a long-term problem. In December, the measure expires, meaning progressives must go to their Republican counterparts if they expect to find a way to avoid a default towards the end of the year.
Why the Debt Limit Matters
Congress created a debt limit in 1917 to make it easier to provide the necessary funds for World War I by categorizing bonds. That way, lawmakers could pass separate funding measures instead of having to provide for an overall budget all at once. Then, in 1939, Congress passed the first collective debt limit and passed the matter of bond issuance to the Department of Treasury.
The United States government routinely spends more money than it manages to take in each year. As a result, Congress has modified the debt ceiling 78 times since 1960.
When the government outspends revenue, the Treasury Department borrows money by creating securities. Investors trade those securities, and the US government pays them off at a later date with interest.
If Congress fails to raise the debt limit, that will throw the United States into default. If that happens, Standard and Poor’s could lower the United States’ credit rating leading to increased costs to borrow money in the future. It could also lead to missed payments for benefits programs like Social Security.
All too often, Republicans and Democrats find themselves battling it out about the debt ceiling every year as the year starts drawing to a close. With any luck, Democrats will set aside their goal of adding trillions of dollars to the nation’s debt with their beloved reconciliation bill and take care of past debts before it is too late.
In the meantime, President Joe Biden signed the recent measure into law on Thursday, just days before the October 18 deadline, to avoid a government default.
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