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Just days before the U.S. would default on its debt obligations, President Biden signed into law a measure that temporarily raises the nation’s debt ceiling on Thursday evening, but a new game of partisan political chicken looms as soon as early December.
Congress approved the modest $480 billion increase in the borrowing limit after Senate Republicans backed away from creating a fiscal disaster and ended a weeks-long standoff with Democrats.
Economists had warned that the nation would default on its obligations if the debt limit was not raised by Oct. 18, an unprecedented crisis that could potentially push the economy into recession after months of steady recovery from the COVID pandemic.
Global markets rose in relief after Congress acted. But the relief is short-lived as the debt ceiling is boosted only until Dec. 3.
Republicans are vowing they will not blink again and allow another short-term deal. They say tax-and-spend Democrats should include the debt ceiling rise in their reconciliation budget bill that only needs Democratic votes to pass.
Congress also must pass an end-of-year spending bill to avert a Scrooge-like government shutdown just before Christmas.