US Senate votes to temporarily extend debt ceiling to avoid default

US Senate votes to temporarily extend debt ceiling to avoid default
Treasury Secretary Janet Yellen. Source: Getty Images
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Daily US Times: US Senators have voted to temporarily extend the country’s debt ceiling – the limit on how much the government can borrow – less than two weeks before it was due to be reached.

Disagreements over the debt ceiling are not new in US politics.

But the ongoing disagreement between Democrats and Republicans has caused jitters in the financial markets.

There were fears in the United States that the country would default on its national debt, with catastrophic global implications.

The Senate decided on Thursday by a vote of 50-48 to extend the debt ceiling until early December. The bill will now be sent to the House of Representatives, the lower chamber of Congress, for approval before it can be sent to President Biden for his signature.

The temporary measure raises the country’s debt ceiling to $480 billion.

The vote was held hours after the top Democrat and Senate Majority leader Chuck Schumer announced that a deal had been reached.

The announcement came after Republican leader in the Senate Mitch McConnell said were negotiations “in good faith” that had continued through the night.

The agreement between Republican and Democratic Senators comes less than two weeks before 18 October, the day the US Treasury Secretary Janet Yellen warned was the deadline to prevent the first ever US default.

US legislators will still have to address this issue near the new December deadline to avert a default.

Analysts say, if the US defaulted on debts, it would severely hurt the country’s credit rating, plunge the global financial system into turmoil, and possibly lead to a self-inflicted recession.

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