The US Senate has approved a bill that would increase the US federal state’s borrowing limit, preventing the risk of the world’s largest economy being forced to declare a moratorium on payments.
Only with their own votes did the Democratic senators approve the bill, which gives the federal state the power to repay its debts by early 2023.
The Democratic-majority House of Representatives will have to give the green light to the measure before it can be signed and ratified by President Joe Biden.
Jump into the unknown
The issue is urgent: the debt limit – the maximum amount the US government can borrow – must be raised at any cost by Wednesday at the latest, because otherwise the federal government will no longer be able to repay the debts. to its creditors and will be forced to slash its costs.
This unprecedented situation would plunge the US financial markets and the US economy into crisis, dragging the world economy and causing a recession. However it seems less and less likely.
“The American people can breathe a sigh of relief: there will be no stoppage of payments,” said Senate Majority Leader Chuck Sumer.
The text approved by the body on Tuesday, the fruit of several days of negotiations, was revealed a few hours earlier by Democratic elected officials. It raises the country’s borrowing limit by $ 2.5 trillion.
The White House emphasizes that it “strongly supports” this initiative, thanks to which the US Treasury Department will be able to “repay its obligations without causing any disruption or damage to our economy and American families.”
He urges Congress to adopt it immediately.
Blank check
Raising the debt threshold is normally a standard procedure, but this time it took very hard negotiations in Congress for months, as Republicans refused to agree, arguing that they would give a blank check to Joe Biden, who is also blamed for the surge. inflation.
Democrats have argued that the increase in the borrowing limit was intended to pay off commitments already made, including several billion dollars spent on Donald Trump’s presidency.
The Republican opposition finally allowed them to use a complex parliamentary maneuver that required Democrats to use only their own votes to raise the famous “ceiling.”
The adoption of the new borrowing limit will somewhat alleviate Joe Biden, who faces other dangers on Capitol Hill: the gigantic social and ecological aspect of his plan to “better rebuild” America remains to be approved. 75 trillion. to stop the free fall of its popularity, with less than a year to go before the extremely crucial by-elections in November 2022.
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