Congress lifts debt-ceiling on same day as deadline that risked plunging country into economic chaos

• The House voted 221 to 209 to pass a $2.5 trillion increase to the debt ceiling early Wednesday.
• The hike pushes the next debt-limit battle to 2023 and averts a possible default mere hours before the deadline.
• Hitting the debt ceiling risked erasing months of progress in the continuing pandemic recovery.

The House passed a $2.5 trillion increase to the debt ceiling early Wednesday morning, staving off an economic disaster just ahead of an urgent deadline.

The body voted 221 to 209 at around midnight eastern time to lift the limit on how much the government can borrow. Only one Republican joined Democrats in backing the measure. The vote comes after the Senate passed it earlier in the day along party lines.

The late-night vote marks the final step for Congress to pass the increase and send it to President Joe Biden for his signature. It also saves the US economy from crisis just hours before a dire cutoff. Treasury Secretary Janet Yellen previously warned the government would hit the debt ceiling on December 15, and that breaching the deadline risked a default on federal debt.

The $2.5 trillion hike is expected to push the next debt-ceiling battle past next year’s midterm elections and into 2023. Although the Build Back Better plan making its way through Congress would add roughly $1.75 trillion to the deficit, only some of the related borrowing would happen before 2022. Expectations for Republicans to take control of the House could tee up an even more intense fight over the limit when it approaches next, as the GOP has been extremely critical of Biden’s spending agenda.

The debt ceiling limits how much the government can borrow to cover its bills for past spending. Congress came close to hitting the limit in October as Republicans pushed Democrats to raise the ceiling on their own through the time-consuming reconciliation process. Senate Minority Leader Mitch McConnell offered Democrats a 2-month extension in early October to dodge default, punting the problem into December.

The latest fix involved an even more novel process. Congress approved a one-time rule change last week to carve out the filibuster and allow Senate Democrats to raise the ceiling with a simple majority. The measure opened the door for Democrats to avoid catastrophe while letting Republicans say they didn’t directly vote to raise the ceiling.

Sen. Dick Durbin told reporters on Tuesday that the $2.5 trillion sum was agreed to in negotiations with Republicans on the rule change.

Fourteen Senate Republicans voted with Democrats to pass the one-off reform, but other GOP members raised concerns over the deal striking a new precedent. The agreement struck by McConnell and Senate Majority Leader Chuck Schumer to lift the limit “was a mistake,” and it was “cynical” to connect the measure to Medicare funding, Sen. Josh Hawley of Missouri told Insider on Thursday.

Letting the House vote to change Senate procedure “on something this contentious” was “not the way to go,” Sen. Lindsey Graham of South Carolina told Insider.

For now, the country can rest easy knowing the debt ceiling isn’t looming over the pandemic recovery. A self-imposed default would be disastrous for the still-healing economy. Hitting the ceiling could quickly freeze payments to government workers and service members, halt Social Security payouts, and immediately destroy trust in the US dollar. Without the last-minute votes, the country could’ve plunged into a wholly new and unprecedented recession.