WASHINGTON, Dec 8, 2021 (BSS/AFP) - US senators struck a deal Tuesday to
create a one-time law allowing Democrats to lift the nation's borrowing
authority and avert a catastrophic credit default without requiring votes
from the opposition Republicans.

   The House of Representatives approved the fix in an evening vote and it is
expected to be approved by the Senate in the coming days -- allowing
lawmakers to avert the crisis with a simple 51-vote majority in the upper
chamber.

   The Bipartisan Policy Center said last week it expected the United States
would no longer be able to meet its debt repayment obligations between
December 21 and January 28. US Treasury Secretary Janet Yellen has put the
deadline even earlier -- next Wednesday.

   "Nobody wants to see the US default on its debts. As Secretary Yellen has
warned, a default could eviscerate everything we've done to recover from the
Covid crisis," Democratic Senate Majority Leader Chuck Schumer said on the
floor of the chamber.

   "We don't want to see that, I don't believe we will see that, and I
continue to thank all my colleagues for cooperating in good faith to preserve
the full faith and credit of the United States."

   America spends more money than it collects through taxation, so it borrows
money via the issuing of government bonds, seen as among the world's most
reliable investments.

   Around 80 years ago, lawmakers introduced a limit on how much federal debt
could be accrued.

   The ceiling has been lifted dozens of times to allow the government to
meet its spending commitments -- usually without drama and with the support
of both parties -- and stands at around $29 trillion.

   Democratic leaders have spent weeks underlining the havoc that a default
would have wrought, including the loss of an estimated six million jobs and
$15 trillion in household wealth, as well as increased costs for mortgages
and other borrowing.

   But Republicans in both chambers of Congress initially objected to helping
raise the limit this time around, saying they refused to support President
Joe Biden's "reckless" taxing and spending plans.

   In reality, both parties see raising the borrowing cap as politically
toxic, and Republicans hope to weaponize the issue in the 2022 midterm
election campaign.

   Under the complex, multi-step compromise proposed Tuesday, the Republicans
can essentially stand on the sidelines, offering help to create the new law
but offering no votes to increase the limit.

   Congress would have to specify the exact dollar amount of a new borrowing
cap -- likely upwards of $30 trillion.

   After the Senate has followed the House in approving the new process, both
chambers are expected to pass the extension by simple majority votes ahead of
the deadline.

   Crucially, Mitch McConnell, the leader of the Republicans in the Senate,
is backing the process.

   "I think this is in the best interest of the country, by avoiding
default," he told reporters when questioned about the convoluted approach.