(Bloomberg) -- Senate Democrats introduced legislation to raise the nation’s debt ceiling by $2.5 trillion, an amount intended to be enough to extend U.S. borrowing authority until early 2023.
The Senate is expected to clear the legislation on Tuesday, and the House plans to act soon after that.
“Responsible governing has won on this exceedingly important issue,” Senate Majority Leader Chuck Schumer said on the Senate floor. “The American people can breathe easy and rest assured there will not be a default.”
Congress previously approved legislation establishing a one-time process to fast-track the measure by shielding it from the threat of a GOP filibuster in the 50-50 Senate. Instead, the legislation can pass in the Senate with a simply majority.
Treasury Secretary Janet Yellen has warned that the government could hit the debt limit and have difficulty meeting its obligations after Dec. 15, though outside analysts have said the government has a bit more time.
Congress added $480 billion to the U.S. debt ceiling in October after weeks of partisan sniping that unnerved investors. This time, Majority Leader Chuck Schumer and Minority Leader Mitch McConnell agreed on a process that allows the debt ceiling to be lifted without any Republicans having to support it.
Boosting the debt limit will allow the Treasury to replenish its depleted stockpile of cash and remove the risk of non-payment for government securities. Political wrangling over the issue had seen traders impose discounts on Treasuries maturing in the latter half of December. Those discounts were rolled back after news of the debt-ceiling plan, with yields on Treasury bills maturing during the second half of December dropping as much as 5 basis points.
Democrats successfully rebuffed GOP efforts to force them to use the so-called budget reconciliation process -- which they used for a March pandemic-relief bill and are deploying for a $1.6 trillion social-spending bill -- to boost the debt ceiling. That route would have involved substantially more parliamentary maneuvering, amid a year-end calendar already burdened with tasks for the legislature.
©2021 Bloomberg L.P.
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