US legislators reach deal to avert pending debt default | Business and Economy News

Officials say the US could not pay its creditors in days if the credit limit is not raised.

US lawmakers reached an agreement to avert what experts believe to be catastrophic loan default just days before the country faces failure to meet its debt repayment obligations.

Party leaders said Tuesday that senators had agreed to pass a one-time law allowing Democrats to raise the nation’s credit limit with just a simple majority in the 100-member Senate.

The Democrats have 50 seats in the Senate, and Vice President Kamala Harris, a Democrat, can vote in the event of a tie.

The lifting of the debt limit typically requires 60 votes in the Senate.

The House of Representatives, which is controlled by the Democrats, approved the one-time solution in an evening vote. It is now expected to be approved by the Senate in the coming days, at which point both chambers are expected to pass laws to raise the debt ceiling.

The bipartisan Policy Center said last week it assumed the US would be unable to meet its debt repayment obligations between December 21 and January 28.

US Treasury Secretary Janet Yellen has set the deadline for December 15th even earlier.

“Nobody wants to see the US default. As Secretary of State Yellen has warned, a default could undo everything we did to recover from the COVID crisis, “Senate Democratic majority leader Chuck Schumer said Tuesday.

“We don’t want to see this, I don’t think we will, and I continue to thank all of my colleagues for their trustful cooperation in maintaining the full trust and recognition of the United States.”

Crucially, Mitch McConnell, the Senate Republican leader, supports the new, albeit tangled, path forward.

“I think this is in the best interests of the country by avoiding default,” he told reporters when asked about the approach.

The US spends more money than it collects through taxes, so it borrows by issuing government bonds, which are government bonds that can be bought by individuals, institutions, and countries.

About 80 years ago the legislature introduced a limit on the accumulation of national debt.

That cap has been raised dozens of times to allow the government to meet its spending commitments – usually without drama and with bilateral support.

Democratic leaders have spent weeks warning of the havoc a default would wreak, including the loss of an estimated six million jobs and $ 15 trillion in household assets, as well as increased mortgage and other credit costs.

However, Republicans in both houses of Congress initially declined to raise the cap this time, saying they refused to support President Joe Biden’s “ruthless” tax and spending plans.

In reality, both parties consider raising the credit ceiling to be politically toxic, and Republicans are expected to use the issue as a weapon in the 2022 midterm election campaigns.

https://www.aljazeera.com/news/2021/12/8/us-legislators-reach-deal-to-avert-pending-debt-default