Against default: US Senate approves $ 2.5 trillion in debt

Against payment default
US Senate approves $ 2.5 trillion in debt

The USA will probably remain liquid: the US Senate approves the raising of the debt limit by one vote. If the House of Representatives gives its okay now, the impending insolvency will be averted at the last minute.

By raising the debt ceiling, the US Senate has taken a decisive step to prevent an imminent government default. The Congress Chamber passed the increase with 50 Democratic votes. 49 Republicans voted against. This allows the Chamber of Government to borrow $ 2.5 trillion in additional debt. The House of Representatives, in which the Democrats also have a narrow majority, has yet to approve the increase. Previously, Republicans and Democrats in the House of Representatives had agreed on a procedural change, according to which a simple majority is sufficient.

The Treasury Department last warned that the government could run out of money this week. The government’s debt ceiling was last at $ 28.9 trillion, according to the Congressional Budget Office (CBO). The new debt would therefore result in an upper limit of $ 31.4 trillion – significantly more than the US economic output of a year.

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 Treasury Department had warned that a default in the world’s largest economy could trigger a global financial crisis and economic downturn.

The political tussle about raising the debt ceiling has been dragging on for some time. In October, the US Congress approved an increase in the debt ceiling by $ 480 billion to allow more time for a longer-term solution. The Republicans refused to support US President Joe Biden’s Democrats in this. Ultimately, they agreed to a process that would allow the Democrats to push through the Senate increase with a slim majority.

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