On July 28th, 2021, the US House of Representatives passed a bill to raise the debt ceiling, bringing the country closer to averting a historic default. The bill, which was passed with a vote of 219-208, will now head to the Senate for approval.
The debt ceiling is a limit on the amount of money the government can borrow to pay its bills. If the debt ceiling is not raised, the government will not be able to pay its bills, which could lead to a default on its debt obligations. This would have severe consequences for the US economy and could cause a global financial crisis.
The current debt ceiling was set at $22 trillion in March 2019. Since then, the government has continued to borrow money to fund its operations, and the debt has now surpassed $28 trillion. The Treasury Department has been using extraordinary measures to avoid default, but those measures are expected to run out in October.
The bill passed by the House would suspend the debt ceiling until December 2022, allowing the government to continue borrowing money to pay its bills. It also includes funding for disaster relief and Afghan refugees.
The bill faced opposition from Republicans, who argued that it would increase government spending and debt. However, Democrats argued that raising the debt ceiling was necessary to avoid a catastrophic default and that the bill included important funding for critical programs.
The Senate is expected to take up the bill in the coming weeks. If it passes, it will be sent to President Biden for his signature.
The passage of this bill is a critical step in ensuring the stability of the US economy. A default on US debt would have far-reaching consequences, including higher interest rates, a weaker dollar, and a potential recession. By raising the debt ceiling, Congress is ensuring that the government can continue to pay its bills and meet its obligations.
However, this is only a temporary solution. The debt ceiling will need to be raised again in the future, and Congress will need to address the underlying issues of government spending and debt. In the meantime, the passage of this bill is a welcome relief for the US economy and a reminder of the importance of responsible fiscal policy.
