The U.S. Senate removed the threat of a catastrophic default on Thursday after days of tension. A bill to raise the country’s debt ceiling until early December will normally unfold.
For now, only the Democratic senators voted for the bill, which raised the country’s debt limit by $480 billion. This would allow the country to honor its payments until December.
However, the bill still needs approval by the House of Representatives, before Joe Biden can sign it into effective law. A vote is likely next week.
“The Republicans are playing a dangerous and risky game,” stressed Schumer, blasting the opposition for its adamant refusal to agree on a permanent solution.
The White House affirmed that the Democratic president is “looking forward” to signing the deal, but distrusted the temporary solution as well. Treasury Secretary Janet Yellen said on CNN that December 3 “is a short deadline”.”There is still uncertainty in the longer term.”
Budget and investment plans
The Republican party refuses to consider raising the debt ceiling long-term because it would give Joe Biden a blank check to fund his massive investment plans. The Congress has not yet passed these plans, so it is using the debt limit to pay down money it has already borrowed.
If Congress is to avoid a shutdown of federal services, it must also agree on a new budget by early December.
Despite these setbacks, Democrats are hoping to move forward with the difficult negotiations within their own party. They are looking to adopt the two big investment plans sought by Joe Biden, in infrastructure and social reform.
Before the agreement’s announcement, the U.S. Treasury had indicated that the world’s largest economy could find itself in default of payments as early as October 18 if Congress failed to increase the country’s debt capacity.