A majority of members of the US Senate, in a vote that is still ongoing, voted in favor of the measure that allows to increase the borrowing limit of the US federal state ($ 28.9 trillion).
This avoided the risk of the country being forced to declare a moratorium on payments for the first time in its history, something that would have catastrophic consequences for the US economy, engulfing the entire world economy.
What would happen if the debt limit increase and payment defaults were not approved
The debt limit is the maximum amount that a US government can borrow. It is set by Congress and any sacrifice must be increased or suspended by December 15, as otherwise the federal government will no longer be able to repay its debts to its creditors and will be forced to cut its spending.
This unprecedented situation would plunge the US financial markets and the US economy into crisis, dragging the world economy and causing a recession.
The US, which like almost all of the world’s major economies has been living on credit for decades in terms of its public finances, has in several cases raised this inclusive “threshold”, which under normal circumstances requires the votes of both Democrats as well as Republicans.
But the Republican opposition categorically refuses to consent at this time, arguing that it would give a blank check to Joe Biden, who blames rising inflation.
After weeks of negotiations, it finally gave the green light on Tuesday to resort to a complicated parliamentary maneuver, already approved by the House of Representatives, to allow Democrats to increase the borrowing limit only with their own votes.
This maneuver was approved yesterday by the Senate.
The issue will return to the hands of the members of the House of Representatives at the beginning of next week, who have until Wednesday to prevent the suspension of payments.
“We still have a few steps to go to fully resolve this issue,” said Democratic Sen. Chuck Sumer, addressing the semicircle yesterday. “But I am optimistic that after today’s (yesterday’s) vote, we are well on our way to avoiding a catastrophic default,” he added.