U.S. Debt-Ceiling Hike on Path for Final Passage Next Week

(Bloomberg) -- The U.S. Senate passed legislation creating a fast track to raising the nation’s debt ceiling, paving the way for Congress to act next week to eliminate the risk of a U.S. default.

The measure passed Thursday on a 59-34 vote and now heads to President Joe Biden’s desk for his signature.

The bill gives the Democratic majority one-time authority to raise the country’s borrowing limit in a separate piece of legislation without threat of a GOP filibuster. 

The amount of the increase hasn’t been announced, but is likely to cover borrowing into January 2023. Timing for a vote on the debt limit hike, which can be passed by a simple majority, hasn’t been set. It will then go to the House, which has scheduled a vote on final passage for Tuesday.

The deal that cleared the way for the fast-track authority was negotiated between Senate Majority Leader Chuck Schumer and Senate Minority Leader Mitch McConnell. It marked an about-face for Senate Republicans, who earlier vowed not to cooperate with Democrats on increasing the debt limit.

“It was the right thing to do because the last thing in the world this country needs is a default,” Alaska Senator Lisa Murkowski, one of 10 Republicans who voted for the bill, said earlier Thursday. “And so we’ve set up a process to avoid default. It’s not ideal, but it allows us to avoid the catastrophe that would come if we default.”

The procedure to raise the debt ceiling was tied to legislation that cancels automatic cuts to Medicare, farm subsidies and other programs triggered by deficit spending earlier this year under the so-called Paygo law.

Treasury Secretary Janet Yellen has warned that the government could hit the debt limit and have difficulty meeting its obligations after Dec. 15, though outside analysts have said the government has a bit more time. The House plans to pass the actual debt limit increase Dec. 14. 

Negotiations

Congress added $480 billion to the U.S. debt ceiling in October after weeks of partisan sniping that rattled financial markets. Republicans demanded that Democrats use their slim majorities in both chambers to approve a debt ceiling increase on their own using a budget process Democrats said was too cumbersome and designed to impede their work on Biden’s nearly $2 trillion economic package.

McConnell ultimately pivoted and proposed the short-term increase approved in October. Eleven Republicans joined Democrats to pave the way for a floor vote. At the time, McConnell vowed it would be the last time Republicans would come to the aid of Democrats on the debt ceiling.

But McConnell began discussions with Schumer in November to move the next increase. On Tuesday the two said they had agreed on the one-time procedural maneuver that likely will result in a higher debt ceiling by this weekend or early next week. Schumer declared that “Democrats would carry the burden” of voting for it.

“I think this is in the best interests of the country,” McConnell said of their accord, adding that it also was in “in the best interests of Republicans.”

The compromise allowed Republicans to cast a “no” vote on raising the debt ceiling while default is averted. It comes a week after McConnell and Schumer agreed on a stop-gap spending bill that extends current agency spending levels until Feb. 18, averting a government shutdown.

Republican Resistance

All but one Republican in the House voted against the compromise and some GOP senators were critical of the approach. Senator Chuck Grassley of Iowa, the longest-serving current GOP senator, said “it’s a gimmick to get around the filibuster” that could lead to other attempts to bypass the minority party on debt limit increases.

“I think it’s a bad precedent,” Grassley said on Bloomberg Television’s “Balance of Power” program.

McConnell’s allies say the GOP leader is looking toward next year’s midterm elections and is more interested in keeping the focus on Biden’s lower approval ratings and the soaring inflation that is crimping household budgets throughout the nation.

In addition to McConnell and Murkowski, eight other Republican senators voted with Democrats for the bill:  John Barrasso of Wyoming, Roy Blunt of Missouri, Shelley Moore Capito of West Virginia, Susan Collins of Maine, Rob Portman of Ohio, Mitt Romney of Utah, John Thune of South Dakota and Thom Tillis of North Carolina.

Four other Republicans voted earlier to advance the legislation but voted against it on the floor: Richard Burr of North Carolina, Roger Wicker of Mississippi, John Cornyn of Texas and Joni Ernst of Iowa. 

(Updates with Republican votes in sixth and final two paragraphs)

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