House Clears Short-Term Debt-Cap Increase, Sending It to Biden
(Bloomberg) -- The House Tuesday approved a short-term increase in the government’s debt limit, sending the legislation to President Joe Biden just days before the U.S. Treasury was at risk of running out of borrowing authority.
The - 219-206 vote staves off the threat of an immediate financial calamity, but sets the stage for another partisan confrontation on debt and spending in less than two months.
Biden is expected to swiftly sign the bill to raise the statutory ceiling by $480 billion, a move designed to allow the Treasury Department to meet the federal government’s obligations through Dec. 3. Treasury Secretary Janet Yellen had warned the current debt limit would be breached around Oct. 18 without congressional action.
“We can argue about whatever else we’re going to do in the future -- but when Congress votes, no matter who’s in charge, to spend money we have a obligation to pay these bills,” said House Rules Committee Chairman Jim McGovern.
McGovern said the vote for now averts “a self-made, utterly preventable catastrophe” while lawmakers can work on a longer-term plan.
The bill will re-set the Treasury’s so-called extraordinary measures, which have been averting a federal payments default since the debt ceiling kicked back in at the start of August, following a two-year suspension. The department by law must replenish the accounts that had been tapped to meet payments. By early November, the Treasury is likely to need again to begin its extraordinary-measures routine, according to Wrightson ICAP.
The intention of the legislation was for the new debt-ceiling deadline to coincide with the Dec. 3 expiration of a stopgap measure to fund the federal government’s regular appropriations. But the Treasury may end up having more cushion than that -- potentially into early January or even February, analysts said. For one thing, the department’s rate of cash burn is slower now than last year, when pandemic-spending needs were acute.
The measure passed Tuesday, mostly along party lines, came in a procedure that shielded lawmakers from taking a direct vote on the matter. The debt language was “deemed” automatically approved with the approval of rules advancing or three unrelated bills to a floor vote. The vote came in the middle of a congressional break. Dozens of House members from both parties weren’t in Washington and cast their votes by proxy.
Republicans accused House Speaker Nancy Pelosi of employing that indirect-vote procedure as a legislative sleight-of-hand to insulate them from political blow-back from voters over raising the nation’s debt limit.
“When directly voting on something might be too tough on Democratic members, just wave a magic wand and it will pass. Deem it passed,” Republican Representative Tom Cole of Oklahoma said during debate in the Rules Committee. “The American people will see through this sham.”
McGovern responded that House Democrats had already passed a stand-alone debt ceiling bill last month. “No one is hiding anything,” he said, but that this was an “efficient” way of addressing and passing the changes made by the Senate.
Senate Republican leader Mitch McConnell has already signaled another battle looms when the debt ceiling deadline comes up again in December. In a letter last week to Biden, McConnell said Senate Republicans helped prevent the immediate crisis but warned they won’t cooperate with Democrats in raising the limit again.
Republicans want Democrats to use a process called reconciliation, which they are using to push through a sweeping social-spending bill that enacts most of Biden’s economic agenda.
Reconciliation bypasses the filibuster rule, which the minority party can use to block most other legislation. Pelosi reiterated that Democrats have no intention of using reconciliation for the debt ceiling, saying that dealing with the issue was a bipartisan responsibility.
She suggested she could support legislation that would allow the Treasury Department to lift the debt cap on its own, with Congress then able to decide whether to overrule it.
“I do think it has merit,” she said. “That seems to have some appeal to both sides of the aisle, because of the consequences to people for not lifting it.”
The debt ceiling and government funding fights will be happening at the same time congressional Democrats are to enact some version of Biden’s social safety net agenda, amid intra-party disagreements on the size and content of the multi-trillion dollar bill.
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