In a race against time, both chambers worked diligently to meet the Monday deadline, and on Wednesday, the House successfully passed the bill.
Schumer expressed his relief and reassurance, stating, “America can breathe a sigh of relief because, through this process, we are avoiding default,” during his Senate remarks.
It is anticipated that the proposed amendments will not gather enough support to be incorporated into the legislation. However, if any of them do receive sufficient backing, the measure would need to be sent back to the House of Representatives, potentially raising the risk of a first-ever default on Washington’s debt payments.
Schumer and his Republican counterpart, Minority Leader Mitch McConnell, made a commitment to expedite the bill negotiated by President Biden and Republican House Speaker Kevin McCarthy. This bill aims to temporarily suspend the debt limit, providing temporary relief in exchange for a spending cap.
The Treasury Department has cautioned that if Congress fails to take action, it will be unable to fulfill all its financial obligations on June 5.
Technically, the Treasury reached the statutory borrowing limit of $31.4 trillion in January. Since then, it has been employing “extraordinary measures” to patch together the necessary funds for government payments.
Over the past five months, Democrats and Republicans have engaged in a contentious debate over the debt limit. With a slim majority in the House, Republicans have insisted that significant cuts in government spending be included in any agreement to raise the debt limit.
Meanwhile, in the midst of this situation, President Biden, accompanied by Treasury Secretary Janet Yellen and key members of Congress, openly recognized the grave consequences of allowing a debt default due to insufficient funds.
At this critical juncture, Senator Schumer reiterated this crucial message as he guided the bill towards its ultimate approval. He emphatically stated that a default would undoubtedly precipitate yet another recession, inflicting a nightmarish scenario upon our economy and countless American families. The recovery from such a catastrophe would be an arduous and protracted process spanning multiple years.
On Wednesday evening, the bill secured passage in the Republican-controlled House with a vote of 314-117, signifying a loss of support from numerous Republican colleagues for McCarthy.
Emphasizing the urgency of the matter, Schumer expressed on Thursday, “Time is a luxury the Senate does not have. Any needless delay or any last-minute holdups would be an unnecessary and even dangerous risk.”
In the Senate, Democrats hold a narrow majority of 51-49. As per the chamber’s regulations, most legislation requires 60 votes to proceed, necessitating at least nine Republican votes for the successful passage of bills, including the debt ceiling agreement.
Among the proposed amendments to be deliberated upon are measures to enforce deeper spending cuts than those outlined in the House-approved bill, as well as the prevention of swift final approval for a West Virginia energy pipeline.
Republican Senator Roger Marshall put forth an amendment to implement new border controls in response to the influx of immigrants at the U.S.-Mexico border. He asserted that his proposal would “put an end to the culture of lawlessness at our southern border.”
However, the Senate rejected the amendment after Democrats argued that it would jeopardize protections for child migrants and impede American farmers from accessing necessary workers.
Additionally, Republicans seek to bolster defense spending beyond the levels stipulated in the House-passed bill.
Schumer clarified that the spending limitations outlined in this legislation would not restrict Congress from appropriating additional funds for emergencies, including support for Ukraine in its conflict against Russia.
“This debt ceiling deal does not impede the Senate’s ability to allocate emergency supplemental funds to ensure our military capabilities effectively deter China, Russia, and other adversaries, and address persistent and escalating national security threats, including Russia’s ongoing aggressive actions against Ukraine,” Schumer emphasized.
The bill was the result of weeks of intense negotiations between representatives of Biden and McCarthy. The primary point of contention revolved around spending for “discretionary” programs over the next few years, such as housing, environmental protection, education, and medical research, with Republicans advocating significant cuts while seeking increased funding for the military, veterans, and potentially border security.
Ultimately, the Republican proposals for spending cuts were substantially reduced.
According to the nonpartisan Congressional Budget Office, the bill is estimated to save $1.5 trillion over a decade. This falls short of the $4.8 trillion in savings targeted by Republicans in a bill passed by the House in April and also below the $3 trillion deficit reduction over the same period that Biden’s proposed budget aimed to achieve through new taxes.
The United States last faced such a precarious situation nearing default in 2011. The standoff severely impacted financial markets, resulted in the government’s credit rating being downgraded for the first time, and led to increased borrowing costs for the nation.
Original source: Reuters