The Senate passed a one-time loophole Thursday night to empower Democrats to raise the debt limit on their own, a major step toward warding off mid-December economic fallout.
The chamber cleared the bill in a 59-35 vote, sending it on to President Joe Biden. Once signed into law, the measure would give Senate Democrats a free pass to raise the U.S. borrowing limit in a simple-majority vote, rather than facing the usual 60-vote hurdle to move legislation forward.
Both the House and Senate plan to pass another bill in the next few days to actually raise the debt limit, preventing the United States from defaulting on its more than $29 trillion in loans as soon as next week.
Senate Majority Leader Chuck Schumer called the Thursday action “a crucial" step to "avoiding the prospect of a catastrophic, calamitous default on our sovereign debt.”
"This is the responsible path forward — no brinksmanship, no default on the debt, no risk of another recession," Schumer said on the floor. "We still have a few more steps to take before we completely resolve this matter, but I’m optimistic that after today’s vote, we’ll be on a glide path to avoid a catastrophic default."
The bill the Senate passed Thursday would also avert another fiscal cliff, staving off billions of dollars in cuts to Medicare payments and agriculture subsidies that come as a side effect of using the budget reconciliation process Democrats employed to enact a $1.9 trillion pandemic aid package in March.
The chamber cleared the 60-vote hurdle on the debt limit workaround in a 64-36 vote Thursday afternoon. Fourteen Republican senators supported it, setting in motion the deal Schumer struck with Senate Minority Leader Mitch McConnell to allow Democrats to raise the debt ceiling without Republican votes for the increase itself.
While Democrats have yet to divulge a dollar amount for the new debt ceiling they plan to set, the cap is expected to exceed $30 trillion, to ensure Congress won’t need to act again until after the midterm elections next year.
“It will be a shock to the system for everybody — and anybody in the country who really can grasp a trillion dollars,” Sen. Roy Blunt (R-Mo.) said about the final vote Democrats are prepared to shoulder alone.
After months of partisan gridlock over raising the nation’s cap on borrowed cash, the Thursday vote puts Congress on track to thwarting a default. Treasury Secretary Janet Yellen has maintained that such a catastrophe could hit as early as next Wednesday, when the Biden administration needs to send $118 billion to the nation’s highway fund as a condition of the bipartisan infrastructure package the president signed into law last month.
The U.S. government has never before defaulted, but economists warn that failure would stun the global economy and undermine the United States’ reputation as a reliable debtor.
McConnell’s agreement to facilitate the workaround to the filibuster is seen as a rare bipartisan assist, even though Senate Republicans don’t plan to offer any GOP votes of support on the follow-up bill that would hike the debt ceiling.
While many Republican lawmakers slammed McConnell this week for negotiating what they say is a bad deal, the truce accomplishes two of the main conditions the minority leader has demanded all year. The Kentucky Republican repeatedly insisted Democrats vote alone on that increase, albeit through the budget reconciliation process the majority party is using to advance Biden’s social spending package. McConnell also wanted Democrats to raise the limit to a specific dollar amount, rather than suspending the cap until a certain date.
McConnell is “getting exactly what he wanted,” Blunt said. “In fairness, probably not the way he would have wanted it. But if you achieve the objective, sometimes you aren’t able to do that exactly like you would have preferred to do it.”
On the Senate floor Thursday, Schumer thanked McConnell for working on the agreement. "Our multiple conversations were fruitful, candid, productive," the majority leader said of his recent debt limit negotiations with his Republican counterpart.
Democrats could have raised the debt limit through the reconciliation process they are using to pass the president’s $1.7 trillion social spending plan without GOP votes. But they were staunchly against doing so, as it would have involved a laborious process that would include dreaded vote-a-ramas, where Republicans could propose unlimited amendments to the bill.
Schumer said Thursday that Democrats have for months been seeking "a simple majority vote to fix the debt ceiling without having to resort to a convoluted, lengthy, and ultimately risky process."
Democratic leaders have also been loath to couple the president’s spending ambitions with a vote to allow the United States to exceed more than $30 trillion in debt.
McConnell seized on Democrats’ reluctance to conflate the two issues, refusing for months to put up any Republican votes to prevent a default, even though Congress has for decades handled the debt limit through bipartisan votes.
The initial Republican ultimatum “was really designed to drag things out and a prescription for not tackling the public’s business,” Senate Finance Chair Ron Wyden (D-Ore.) said this week. “Mitch McConnell is very skilled at advancing his agenda. His agenda from day one has been to prevent Joe Biden from having accomplishments."
Since the nation’s borrowing limit kicked in more than four months ago, congressional intransigence on the debt ceiling has meant the United States has remained on the brink of default since early August, with a brief reprieve in October when Senate Republicans agreed to approve a few more weeks of leeway by supporting a debt limit increase of $480 billion.
The debt debate feeds into the GOP’s main campaign attack ahead of next year’s midterm elections, as Republican politicians tell voters that Democrats are racking up trillions of dollars in red ink, driving inflation and dampening the economy.
The country’s more than $29 trillion debt was spurred by decades of spending under both parties, however, including $5.5 trillion in debt during Donald Trump’s presidency alone.
Marianne Levine and Burgess Everett contributed to this report.