The bill, passed by the Senate last week, now goes to President Joe Biden’s desk for his signature and enactment. He is supposed to sign it later this week and probably Wednesday.
The legislation, which cleared the House with a party-line vote of 219-206, resulted from an agreement between congressional Democrats and Senate Minority Leader Mitch McConnell, R-Ky., and would increase the debt ceiling by $480 billion.
The prevailing national debt is $28.4 trillion and would be authorized to rise to roughly $28.8 trillion.
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While the president is generally expected to sign the bill, failure to do so would end in economic calamity by Oct. 18, Treasury Secretary Janet Yellen has warned.
The president’s top economic advisor told CNBC earlier in October that she would “fully expect” a U.S. recession if the government ran out of means to pay off its bills and triggered an unprecedented default.
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Debt ceiling suspensions or extensions do not approve new government spending, though, do allow the Treasury Department to pay for appropriations Congress has previously approved.
The debt limit extension is expected to allow the government to cover its expenses at least through Dec. 3, House Speaker Nancy Pelosi, D-Calif., announced throughout a press conference Tuesday morning. However, some recent reports suggest the $480 billion increase could last Congress further into December.
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Even if the so-called drop-dead date is later in December, it won’t mean much to lawmakers, announced Raymond James policy analyst Ed Mills.
Mills stated Tuesday morning that McConnell designed the $480 billion plan to force Congress into addressing the debt limit again before the legislature breaks for the holidays.
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“This is structured in a way that the debt limit needs to be dealt with in December to the greatest extent possible,” Mills announced when reached by phone.
“Is it later in December? Is it early January? It’s semantics at that point,” he went on. “When Congress is done in December, they’re going to want to go home and not come back to a ticking time bomb of an issue.”
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The debt-limit agreement between McConnell and Senate Majority Leader Chuck Schumer, D-N.Y., came as a breakthrough after weeks of negotiations.
Republicans want Democrats to pass a longer-lasting borrowing limit increase through budget reconciliation. Reconciliation would enable Democrats to pass a debt limit hike with a simple majority vote and circumvent a GOP filibuster.
The downside for Democrats is that reconciliation will force them to assign a dollar figure to the debt ceiling and make them look responsible for an outsized share of the national debt ahead of the 2022 midterm elections.
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