Key Sentence:
- The U.S. Senate voted to temporarily raise the national debt limit to avoid a historic default that experts say would destroy the economy.
- The Senators agreed to increase the cap by $480 billion (£352 billion) to cover the United States in early December.
After weeks of guerrilla warfare, the project was approved by 50 to 48 votes. The breakthrough came less than two weeks before the U.S. could not borrow or repay loans for the first time. The bill must now be passed by the House of Representatives and sent to President Joe Biden for signature.
The House of Lords vote came after Senate Republican leader Mitch McConnell offered his support for a short-term extension. Senate Republicans previously said raising the debt ceiling was the Democrats' "single responsibility" because they hold power in the White House also both houses of Congress.
They are disillusioned by the new spending proposals Democrats are trying to push without Republican support. McConnell wrote on Twitter last month that his party "will not allow more draconian party taxes and spending."
Justification: What's next with the U.S. debt ceiling?
After the vote, Senate Democratic majority leader Chuck Schumer said that Republicans had "played a dangerous and risky party game." What is needed till is a long-term solution so that we don't experience this risky drama every few months," he added.
But several senior Republicans opposed McConnell's decision to strike a deal with Schumer. For example, South Carolina Senator Lindsey Graham called the move a "total surrender." U.S. lawmakers have yet to resolve the issue nearing the new December deadline to avoid default.
If the U.S. fails to meet its commitments, experts believe it will severely damage the country's creditworthiness, disrupt the global financial system and possibly lead to a self-inflicted recession.
What is the debt limit?
U.S. government spends more than he earns on taxes, so he borrows to cover his shortfall. The U.S. Treasury makes the loans through the issuance of bonds. U.S. Treasuries are considered one from the safest and most reliable investments in the world.
In 1939, Congress set a general limit, or "limit," on how much debt a government could accumulate. The limit has been high more than 100 times to allow the government to borrow more.
However, some Republicans have expressed disappointment with the Democrats' new spending proposal. Democrats say raising the debt ceiling is about paying off existing debt, not new, and that President Biden's policies only account for 3 percent of existing debt.
