The House of Representatives on Tuesday approved legislation to raise the U.S. debt limit, the final legislative hurdle to averting a first-ever national default that was otherwise expected to occur next week.
The bill, passed by the Senate last week, now travels to President Joe Biden’s desk for his signature and enactment. He is expected to sign it later this week and likely Wednesday.
The legislation, which cleared the House with a party-line vote of 219-206, is the result of an agreement between congressional Democrats and Senate Minority Leader Mitch McConnell, R-Ky., and would extend the debt ceiling by $480 billion.
The current national debt is $28.4 trillion and would be permitted to rise to about $28.8 trillion.
While the president is widely expected to sign the bill, failure to do so would result 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 ways to pay off its bills and triggered an unprecedented default.
Debt ceiling suspensions or extensions do not authorize new government spending, but allow the Treasury Department to pay for appropriations Congress has already 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., said during a press conference Tuesday morning. Some recent reports suggest the $480 billion increase could last Congress further into December.
Even if the so-called drop-dead date is later in December, it won’t mean much to lawmakers, said Raymond James policy analyst Ed Mills.
Mills explained 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.
“This is structured in a way that the debt limit needs to be dealt with in December to the greatest extent possible,” Mills said when reached by phone.
“Is it later in December? Is it early January? It’s semantics at that point,” he continued. “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.”