Debt-limit suspension passes house; faces stand-off in Senate

The Democratic-controlled House passed a bill that would suspend the US debt ceiling into December 2022 and provide the government funding to operate past September 30. Republicans have vowed to block it when it reaches the Senate over the debt limit provision. The measure was approved Tuesday night on a 220 to 211 party-line vote.

The debt ceiling suspension — to December 16, 2022 — is urgently needed because the Treasury Department has warned it could run out of accounting measures to stave off a payment default sometime in October. The debt limit came back into effect in August after a two-year suspension.

The political standoff raises the chances of twin fiscal disasters — a government shutdown and a default — that could have devastating consequences for Wall Street and the broader American economy.  “We played chicken with the debt in the early 2010s and the credit of the United States was put down a notch” said House Majority Leader Steny Hoyer. “We do not welch on our debts.”

It is not yet entirely clear what Democrats plan to do after the bill fails to advance in the Senate, likely later this week.  One alternative would be to strip the debt ceiling provision from the funding bill and to pass it in order to avoid a government shutdown on October 1. Democrats could then use the fast-track budget process to pass a debt ceiling increases without Republican support.

But Democrats want Republicans to share political responsibility for the debt, which was increased under both Republican and Democratic administrations, ahead of the 2022 midterm elections. Repub­licans were united in opposition to that prospect.