On Monday, the Senate failed to advance a bill to suspend the federal debt ceiling and prevent a partial government shutdown. After every Republican in the House rejected the bill, the Senate GOP also declined to suspend the debt ceiling. All Republican senators voted against moving the bill forward in a 48-50 vote.
Time is ticking as Congress is running out of time to avoid a government shutdown and default.
To avert a government shutdown, lawmakers must approve funding by Friday. According to the Treasury Department, the United States faces default if Congress does not raise the debt ceiling by sometime in October. The House-passed measure would have financed the government through December and postponed the US debt ceiling until December 2022.
If Congress does not pass the appropriate measures by midnight Thursday, government financing will expire. Treasury Secretary Janet Yellen told legislators that the US would run out of means to pay its debt obligations in October unless Congress lifts the debt ceiling.
The debt ceiling and government spending are two different problems. Raising or suspending the debt ceiling does not enable new government expenditure, but it does allow the US to borrow to pay down existing debt.
The GOP resistance to the bill may compel Democrats to draft a short-term financing deal with GOP backing before approving a debt ceiling suspension on their own — possibly as part of their $3.5 trillion budget proposal.
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.