US House passes bill to avert government shut down, suspends federal debt limit

The United States House of Representatives has passed a bill to avert the government shut down. It has also decided to fund the government and suspend the debt limit in order to prevent a potential economic meltdown. However, the bill is due to be desked before the Senate, where the Republicans have vowed to oppose it, CNBC reported.

The federal government is currently facing an imminent danger of a fiscal crisis in case the debts are not adjusted or waived off sooner than September 30. In a late Tuesday session, the White House-backed Democratic leaders pushed the package to approval at the time of great uncertainty in Congress, the Associated Press reported. "Our country will suffer greatly if we do not act now to stave off this unnecessary and preventable crisis," said Stent Hoyer, D-Md and House or Majority Leader.

"Extraordinary measures"

As per Associated Press, the US government Treasury Department has been struggling to fund the government expenditures since the debt limit expired on July 31. It has also undertaken "extraordinary measures" to meet payment deadlines and avert an economic crisis. According to financial experts, in case the bill is not passed by the Senate, the Treasury Department might run out of cash reserves sometime in the next month. Following this, it will have to rely on incoming receipts to pay its obligations, which currently stand at $28.4 trillion.

It is also worrisome that the failure to secure fund flow would cost 6 million jobs and stock market losses that could wipe out $15 trillion of household wealth. Talking about the economic condition of the US, Treasury Secretary Janet Yellen wrote in an op-ed in the Wall Street Journal that the country could "reverse into recession if the Congress fails to raise the federal debt limit." She also highlighted that "Congress has raised or suspended the country's debt ceiling about 80 times since 1960. Now it must do so again."

Republicans oppose the debt limit suspension

The bill was passed in the US House with a 220-211 majority. While all Democrat leaders stood in favour, Republicans outrightly opposed it. Now, if the bill is failed to be passed by the Senate, the Democrats will have to scramble for an alternative in order to avoid a federal fund lapse. It is noteworthy, that the current developments have also left a grave impact on the US stock market since Monday.

The Republicans have hinted to provide support to the Democratic in regard to the bill if only they separate it from the plan to suspend the debt limit through 2022, Xinhua News Agency reported quoting Senate Minority leader Mitch McConnell. Hinting at a spending binge in the coming months, Republicans asserted that suspending the debt ceiling it will allow the White House to extend the borrowing capacity, thus leading to deeper problems. "I will not support signing a blank cheque as a majority is advancing the most reckless expansion of government in generations," Republican Dan Meuser said during the debate.

However, it is quite surprising to the Democrats as to why Republicans are opposing what was once a routine matter, Associated Press mentioned. It is noteworthy that raising the debt ceiling was once a political weapon for the former White House office bearers to meet the potential fiscal crisis resulted from more spending. Meanwhile, the White House remains confident in the success of the bill despite sharp differences with the progressives and moderates.

With inputs from AP

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