Congress Raises the Debt Limit by $2.5 Trillion

In a measure approved by Congress, the nation's borrowing limit has been raised by $2.5 trillion to eliminate the threat of a debt default until 2023.

In a 50-49 vote on Tuesday, the resolution passed as a one-time exception to the filibuster rule of 60 votes after the Senate passed a bill to that effect. Once approved by the full Senate, Majority Leader Chuck Schumer (D-NY), and Minority Leader Mitch McConnell’s (R-KY) deal facilitated a debt default allowing Democrats to raise the debt ceiling without Republican interference. Further, the bill waving rights to a filibuster revealed exceptions are feasible — an option lawmakers should consider in the future.

Following the Senate’s approval, the measure headed to the House where it passed early Wednesday morning in a 221-209 vote.

“The full faith and credit of the United States should never be questioned. The health of our economy should never be threatened. The financial security of our families must never be gambled,” Speaker of the House Nancy Pelosi (D-CA) stated before the vote.

As previously reported in FEDagent, Janet Yellen told congressional leaders that the federal government would be unable to finance itself after December 15 due to the eventual breach of national borrowing limits. In October, Congress raised the debt ceiling by $480 billion, allowing Treasury to operate until the deadline; however, it is now seeking a longer-term solution.

Historically, the debt limit has acted as a brake on spending decisions by providing bipartisan support by the notion that overspending could cause destabilization of markets, economic collapse, and serious threats to global stability if not checked. Only in recent decades have partisan lines developed on the issue. Since 2001, the national debt has approached the limit 17 times.

“Our latest fiscal health report provides an objective look at the fiscal challenges facing our country. Interest on the debt is the fastest growing element of federal spending. Absent change, it will overtake defense discretionary spending within 15 years and eventually dominate the budget," stated Gene L. Dodaro, Comptroller General and head of the Government Accountability Office (GAO), earlier this week.

According to a Bipartisan Policy Center estimate, the federal government would only be able to pay 60 percent of its bills in a default scenario because spending exceeds revenue daily. Treasury officials and analysts suggest there are two scenarios if a default occurs: defer payments until the government has accrued enough revenue to pay them or prioritize some payments while abandoning others. Either way, payment disruptions could affect beneficiaries, states, grantees, contractors, and employees, with some federal workers facing furloughs or a promise of back pay in the future.

Treasury Department officials indicate that the $2.5 trillion figure will be enough to push the threat of a default to 2023, beyond next year's midterm elections.