As of: 12/15/2021 9:09 a.m.
The US is allowed to incur more debt: after the US Senate, the House of Representatives has now also voted for this. The chambers are thus averting insolvency of the USA. Before that, there was a long struggle.
The US Congress has approved an increase in the debt ceiling and thus averted an imminent US default. In the future, further loans in the amount of 2.5 trillion dollars should be able to be taken out. A few hours earlier, the narrow majority of Democrats in the Senate, the other chamber of Congress, had also voted in favor. The decision in the House of Representatives came with 221 to 209 votes and only a few hours before the date mentioned by Treasury Secretary Janet Yellen, from which the US would have threatened a default.
So far there has never been an insolvency
Finance Minister Yellen had warned that after December 15, her ministry would run out of funds to finance the government. The dispute over the upper limit is usually carried out in Congress until the last minute: So far there has never been a default. The upper limit has already been raised more than 80 times, mostly jointly by both parties.
The resolution will now be submitted for signature to President Joe Biden. Biden needs the debt ceiling to be raised to fund its trillion billion infrastructure, health, environmental and social programs. The government’s debt ceiling was last at $ 28.9 trillion, according to the Congressional Budget Office. The new debt would therefore result in an upper limit of $ 31.4 trillion – significantly more than the US economic output of a year.
Political turmoil for months
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. The US Congress agreed to raise the debt ceiling by $ 480 billion in October to allow more time for a longer-term solution. The Republicans refused to support US President Joe Biden’s Democrats. Ultimately, they agreed to a simplified procedure that allowed the Democrats to push through the Senate increase with a slim majority. The US government had recently had to finance the current business partly with “extraordinary measures”.
Most countries do not have such a parliament-controlled debt ceiling. Most of the time, the amount of the loan results from the resolutions of the parliaments – for example through the budget and other laws that result in expenses. In the USA, too, there have recently been calls to abolish or suspend the border. However, the proposals have not yet found a majority in Congress.