Senate Democrats are poised to raise the debt ceiling by $2.5 trillion just in time to avoid catastrophe — and without any Republican support

Senate Majority Leader Chuck Schumer (D-NY) speaks during a news conference about climate change outside the U.S. Capitol on July 28, 2021 in Washington, DC.
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Senate Democrats are poised to lift the debt ceiling Tuesday to save the US from economic catastrophe.
The vote is expected to fall along party lines and send the ceiling hike to the House for final vote.
The ceiling is expected to be reached on Dec. 15, making the Tuesday vote key to avoiding recession.

The Senate is poised to raise the debt ceiling on Tuesday, advancing a crucial measure just before the US government risks defaulting on debt it has already incurred.

Senate Democrats are set to lift the limit unanimously at around noon on Tuesday, forgoing GOP support to approve the increase. It's anticipated that Vice President Kamala Harris will break a 50-5o tie on the measure. The legislation now goes to the House, where Democrats have said they will act quickly to approve it.

The hike will lift the limit by $2.5 trillion and is expected to cover all government bills set to come due by 2023, Senate Majority Leader Chuck Schumer said Tuesday. Though this vote comes amidst Democrats' push to approve the $2 trillion Build Back Better package, the new debt ceiling would only cover some of that spending, as much of the plan's debt won't be due until after 2022 if it is passed.

The vote comes mere hours ahead of a projected Wednesday deadline. The debt ceiling serves as a limit for how much the government can borrow to pay its bills for past spending. Failure to lift the limit risks default, a freeze to federal government payments, and economic disaster as trust in the dollar plummets. Treasury Secretary Janet Yellen warned in November that the government is expected to hit the borrowing limit on December 15, giving lawmakers just a few weeks to reach a compromise.

The measure was made possible by a deal between Senate Majority Leader Chuck Schumer and Minority Leader Mitch McConnell. The senators negotiated over recent weeks on a one-time rule that would allow Democrats to raise the ceiling with a simple majority. Congress approved the overhaul last week, paving the way for the Tuesday vote.

The Senate vote represents a necessary step toward concluding a months-long battle over the debt limit. The body first stared down a potential default in October as each party blamed the other for failing to raise the limit. Republicans argued Democrats could go it alone through the reconciliation process, and that they wouldn't open the door to any more of President Joe Biden's spending agenda. Democrats fired back by noting debt ceiling deals are historically bipartisan, and that much of the debt was incurred under President Donald Trump.

The one-time rule change helped each party meet in the middle. It opened the door for Senate Democrats to lift the limit on their own, and for Republicans to say they voted against directly raising the ceiling. It also forced Democrats to peg a dollar amount to the hike, something the GOP had pushed for in recent months.

Some Republicans balked at the plan, arguing it lets Democrats off too easy and paved the way for more spending. Sens. Lindsey Graham, Ted Cruz, and Josh Hawley, among others, voted against the rule change last week, though their opposition wasn't enough to block the plan. The one-time change erodes the power of the Senate filibuster, and letting House Democrats alter Senate procedure sets a dangerous precedent, Graham told Insider on Thursday.

"For four months we said [Democrats] were going to use the process of reconciliation to raise the debt ceiling," Graham added. "We took that burden away by doing this."

A debt-ceiling recession is all but certain to be avoided, but Tuesday's vote sets a new standard for just how late Congress will act to stave off default.

Read the original article on Business Insider