- The Senate voted to allow Congress to raise the debt ceiling with a simple majority vote.
- Once President Joe Biden signs the legislation, Democrats will be able to increase the U.S. borrowing limit on their own.
- Treasury Secretary Janet Yellen has estimated the U.S. will run out of ways to pay its bills Dec. 15 if Congress fails to take action.
The Senate cleared a key hurdle on the path toward raising the debt ceiling and quashing the threat of a default on U.S. debt.
Senators on Thursday voted to allow the chamber to raise the U.S. borrowing limit with a simple majority. The measure, attached to a bill that would prevent automatic Medicare cuts at the beginning of next year, now heads to President Joe Biden's desk for his signature.
The Senate and House will have to hold separate votes to increase the debt ceiling. Both chambers are expected to hike the limit early next week before a Dec. 15 deadline.
Treasury Secretary Janet Yellen estimated the U.S. would run out of ways to pay its bills on that date. If Congress fails to raise the debt ceiling, the country would face the threat of a default that could wreak havoc on the global economy and stock markets.
Democrats, who control both chambers of Congress, are expected to increase the borrowing limit by about $2 trillion. It would likely carry the country through November's midterm elections.
Republicans have refused to join Democrats in raising the debt ceiling. Still, Senate Minority Leader Mitch McConnell reached a deal with Majority Leader Chuck Schumer under which the GOP agreed to allow Democrats to increase the limit on their own.
The bill earlier Thursday cleared a procedural hurdle that needed 60 votes, advancing by a 64-36 margin with 14 Republicans in support. The bill itself — which needed only a simple majority — passed by a 59-35 margin.
Democrats will need support from every member of their caucus — along with a tiebreaking vote from Vice President Kamala Harris — to raise the borrowing limit in a separate vote.
Democrats and Republicans typically vote together to raise or suspend the debt ceiling. The GOP has argued Democrats should increase the borrowing limit on their own as they try to pass a $1.75 trillion social safety net and climate package without Republicans.
Raising the ceiling does not authorize new spending. Yellen has also pointed out that lawmakers would have had to address the debt limit regardless of what legislation Democrats passed.