Update (Dec. 16, 2021): A day after Congress finished up passing a bill to raise the debt ceiling by $2.5 trillion, President Joe Biden signed the bill into law Thursday. The bill signing comes a day after Treasury Secretary Janet Yellen sent a letter to congressional leadership saying she had to temporarily suspend two separate funds until the bill was signed.
“I will be unable to fully invest the portion of the [Civil Service Retirement and Disability Fund] not immediately required to pay beneficiaries,” Yellen said in the letter. “Treasury will also suspend, through December 16, 2021, additional investments of amounts credited to the Postal Service Retiree Health Benefits Fund.”
Yellen went on to say federal retirees and employees will be unaffected by these actions.”
Original Story (Dec. 15, 2021): Just hours ahead of a deadline set by Treasury Secretary Janet Yellen to avoid default, the House voted early Wednesday to raise the debt ceiling by $2.5 trillion. The 221-209 vote came just hours after the Senate voted to do the same in a 50-49 vote. The video above shows both the House and Senate votes. Yellen has been warning for months that if Congress failed to raise the debt ceiling “our country would likely face a financial crisis and economic recession.”
“In a matter of days, the majority of Americans would suffer financial pain as critical payments, like Social Security checks and military paychecks, would not reach their bank accounts, and that would likely be followed by a deep recession,” Yellen said at a Senate Banking Committee hearing last month.
The congressional votes come less than a week after Senate leaders Mitch McConnell (R-KY) and Chuck Schumer (D-NY) struck a deal to create a workaround that allowed the Senate to approve legislation with a simple majority and avoid a filibuster. The deal represents a softening of Sen. McConnell’s previous position that he would not “be a party to any future effort to mitigate the consequences of Democratic mismanagement.”
“This is about paying debt accumulated by both parties,” Sen. Schumer said Tuesday.
The nation’s current debt load of $28.9 trillion has been racking up for decades. Major drivers include spending programs like Social Security and Medicare, recent COVID-19 relief packages and a series of tax cuts in recent decades. The most recent fight over the debt limit in Congress has some people considering scrapping the debt ceiling entirely. When asked about that idea at her daily press briefing Tuesday, White House Press Secretary Jen Psaki pivoted to focus on Tuesday and Wednesday’s votes.
“There’s plenty of time for conversations about what it should look like moving forward, but there’s no question it’s a good sign that we are not going to be on the brink of defaulting our U.S. economy or sending the U.S. economy into a recession,” Psaki said. “I expect that those who have alternate ideas or proposals for the debt limit moving forward may be outspoken of those moving forward, but certainly this is a good sign that we’re going to avoid a default and putting all those payments at risk.”
