US Congress averts government shutdown but may default on debt

Partisan gridlock and procedural rules are causing Congress to play chicken with looming deadlines to fund government

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The US Congress narrowly averted a government shutdown on Thursday after weeks of legislative brinksmanship.

However, Democrats were only able to secure enough Republican support to pass the legislation by dropping another provision to raise the debt ceiling, raising the prospect that the US could default on its obligations by mid-October.

Both the Senate and the House of Representatives passed a continuing resolution to fund the government through December 3, thereby avoiding a shutdown that would have likely furloughed hundreds of thousands of federal workers, shuttered national parks and delayed mortgage and other loan applications.

The bill also contains additional provisions to fund the resettlement of Afghan evacuees and hurricane disaster relief.

Why is the government only funded through December 3?

The fiscal year ends on October 1, but as it has in previous years, Congress needs additional time to finish finalising its spending bills for 2022.

The December 3 deadline laid out in the continuing resolution gives Democrats and Republicans an additional two months to agree on 2022 spending legislation.

However, Democrats only received enough Republican support for the continuing resolution by dropping an additional provision to raise the debt ceiling.

What is the debt ceiling?

The US will meet its debt ceiling limit on October 18, requiring Congress to raise it to keep the country from defaulting on its obligations.

And while Republicans voted multiple times to raise the debt ceiling under former president Donald Trump, they are refusing to vote to raise it again under President Joe Biden.

The debt ceiling is a self-imposed cap in the US legal code that limits the amount of money that the federal government can borrow.

Congress has voted to raise the debt ceiling about 100 times since the end of the Second World War, but it became an increasingly contentious issue with the rise of the Tea Party Republican movement under former president Barack Obama.

If Congress were to not raise the debt ceiling by October 18, it is likely that the US would enter a major recession or depression that would drag down the global economy as well.

Treasury Secretary Janet Yellen likened it to raising the US credit card balance in a letter urging members of Congress to raise the debt ceiling.

“Nearly 50 million seniors could stop receiving Social Security checks for a time,” Ms Yellen wrote. “Troops could go unpaid. Millions of families who rely on the monthly child tax credit could see delays.”

“In a matter of days, millions of Americans could be strapped for cash.”

Why can't Democrats unilaterally raise the debt ceiling?

The House voted on Wednesday along party lines to raise the debt ceiling. But though they technically control the Senate, Democrats have been unable to advance a similar measure because of a procedural mechanism called the filibuster.

The filibuster requires 60 votes to pass most bills in the Senate, including the debt ceiling increase. Democrats have only 51 votes, including that of Vice President Kamala Harris, and Republicans used the filibuster this week to block the party from raising the debt ceiling.

Mr Biden has opposed abolishing or even reforming the filibuster. White House Press Secretary Jen Psaki confirmed this week that the president still opposes filibuster reform, even to raise the debt ceiling.

For their part, Republicans have said that Democrats should put the debt ceiling increase in their $4 trillion spending package, which they hope to pass with a simple 51 Senate votes using a legislative mechanism that is immune to the 60-vote filibuster.

But the fate of that spending package, which includes funding for major social safety net programmes and green energy initiatives, is tenuous due to opposition to the price tag and other provisions from some centrist Democrats.

Updated: September 30, 2021, 7:46 PM