House & Senate approve “clean” debt limit increase

The House and Senate passed a “clean” debt limit increase this week, marking the first time since 2011 that Republicans did not attempt to use the threat of government default to exact steep spending cuts.   

The temporary debt limit increase narrowly passed the House with a vote of 221 to 201 on Tuesday, and the Senate followed suit a day later with a vote of 55 to 43 after Republicans agreed to not filibuster the bill. The extension will expire on March 16, 2015.

Read more: Treasury Secretary Jack Lew urges Congress to pass ‘clean’ debt limit increase 

Had Congress not approve the debt limit increase, the Treasury Department, which began implementing “extraordinary measures” after its borrowing authority expired on Feb. 7th, would have run out of cash to pay all the government’s bills on time by the end of the month.

Read more: List of 201 members of Congress who voted against the “clean” debt limit increase on Feb. 11, 2014

A government default would have destabilized the financial markets, significantly raised borrowing costs, and potentially push the U.S. back into a “devastating” recession. The 2011 debt ceiling brinksmanship resulted in the unprecedented downgrade of U.S. credit rating and slowed the economic recovery. The threat of a default last October caused the tripling of interest rates of short-term Treasury yields, adding to the government’s borrowing costs.

“We welcome the news that Congress has acted to meet its responsibility to protect the full faith and credit of the United States by extending the nation’s debt limit,” said Treasury Secretary Jack Lew. “This week’s action combined with the two-year budget agreement and the omnibus spending bill – all of which passed Congress with bipartisan majorities – will provide certainty and stability to businesses and financial markets and should add momentum to the economic growth forecasted in 2014.  Despite the steady progress we have made, we know there is more we can do to expand the middle class and create opportunities for all Americans.  We are eager to continue to partner with Congress on these efforts on behalf of the American people.”

Boehner, who spearheaded the government shutdown and the default crisis in October, begrudgingly agreed to allow a vote on a “clean” debt ceiling bill – that is, a bill without amendments calling for steep spending cuts or the repeal of Obamacare – at the behest of House Democratic Leader Nancy Pelosi.

Although Boehner did end up voting for the “clean” debt limit increase, he lamented the “lost opportunity” for Congress to cut more spending.

“We’re on a spending trajectory that’s unsustainable. The President knows it. Every Democrat and every Republican in this town knows it. And it has to be dealt with. And so it’s a disappointing moment I can tell you that,” said Boehner at a press conference on Tuesday. “We could have sat down and worked together in a bipartisan matter to find cuts and reforms that are greater than the increase in the debt limit. It would have helped us begin to solve the spending problem that we have and begin the process of paying down our debt. So I am disappointed to say the least.”

Read more: List of 43 Senators who voted against the “clean” debt limit increase on Feb. 12, 2014

While Pelosi expressed relief that Congress approved the debt limit increase, she pointed out that most of the Republicans in the House and the Senate voted to default on the government’s debts.

“It’s really stunning that 199 Republicans voted to default on the full faith and credit of the United States of America.  That is not in furtherance of an economy that works for all Americans.  In fact, it doesn’t work for America at all, whether it’s our global standing, or whether it is what is happening at kitchen tables across the country,” Pelosi said.

 

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