Congressional Democrats raise debt limit by $2.5 trillion, averting financial calamity

Late Tuesday night, the House voted to raise the debt ceiling by $2.5 trillion -- a move that should stave off the first-ever default.

The final vote was 221-209.

All Democrats in both the Senate and House voted to raise the debt limit. One Republican, Rep. Adam Kinzinger, from Illinois, joined them.

The Senate cleared the vote earlier Tuesday with zero GOP support.

The bill now heads to President Joe Biden's desk to be signed into law.

Once signed by the president, the legislation will have prevented a U.S. default that could have halted Social Security and veterans' payments, hiked interest on mortgages and loans and disrupted the global economy.

The Treasury Department predicted that the U.S. would be unable to pay its bills come Wednesday.

Congressional action was the last step in a months-long process aimed at raising the federal borrowing limit.

In October, Republican and Democratic leadership locked horns over the spending cap. Though both parties acknowledged the necessity of raising the debt limit, Republicans argued that Democrats ought to raise the limit on their own -- wrongly claiming they needed to offset the cost of Biden's yet-to-be passed $1.75 trillion social spending bill.

Democrats, who helped raise the debt limit multiple times under the Trump administration, insisted it be a bipartisan effort since the debt limit had to be raised to cover past spending.

The October dispute ended in the GOP blinking, with Republicans giving Democrats the votes necessary for a short-term raise to the debt limit, but vowing they'd be less cooperative in the winter.

Last week, however, party leaders announced an agreement on a two-step process to raise the debt limit. Republicans ultimately provided 10 votes to permit a one-time rule change altering the number of votes necessary to pass the debt-limit hike and clearing a path for Democrats to pass the legislation without a single GOP backer.

The reached agreement required Democrats to name a specific amount they want to raise the debt limit by. They settled on $2.5 trillion -- enough to prevent the government from defaulting through early 2023, Majority Leader Chuck Schumer said Tuesday.