“A great victory for our economy and for the American people,” President Joe Biden saw.
After marathon negotiations, the US can breathe a sigh of relief: with votes in Congress, a bill suspends the debt limit until 2025 and the risk of declaring a federal default is averted.
“A great victory for our economy and for the American people,” the president saw Joe Biden.
Just now, Senators from both parties voted to protect our hard-earned economic progress and prevent a first-ever default.
No one gets everything they want in a negotiation, but make no mistake: this bipartisan agreement is a big win for our economy and the American people.
— President Biden (@POTUS) June 2, 2023
According to the US Treasury Department, the world’s largest economy had until Monday, June 5 to avoid default.
Like all major economies in the world, or nearly so, the US lives on credit. But unlike other developed countries, America regularly faces a legal quandary: the debt ceiling, the maximum limit to which government borrowing can reach, must be raised or suspended by Congress.
Although for decades it was nothing more than a formal parliamentary procedure, this year the Republicans, who now control the House of Representatives, in particular their leader in that chamber Kevin McCarthy, turned it into a tool for exerting political pressure on the Democratic president Biden.
Series of meetings in the White House, endless negotiations of advisers… Washington hung for weeks on the lips of those who judged the fate of the famous “ceiling” of the debt.
While it is very common for last-minute deals to be struck on the US fiscal, the tough negotiations prompted Fitch Ratings, one of the so-called ‘big three’ rating agencies, to put US Treasuries on ‘watch’, placing in AAA grade, the highest.
Finally on Saturday night, in the middle of the three-day Memorial Day weekend, the parties reached an agreement in principle. The text made it possible to avoid the worst, that is, the scenario of the country declaring a default, unable to pay its creditors, pay salaries and pensions. An unprecedented situation that would lead the American and global economy into uncharted waters.
To avoid this potentially disastrous development, President Joe Biden and House Speaker Kevin McCarthy reached a compromise.
The agreement was approved yesterday Wednesday with a wide majority by the House of Representatives (314-117) and yesterday Thursday also comfortably by the Senate (63-36). All that remains now is for President Biden to ratify it by signing the bill. The head of state, a candidate for re-election in 2024, said he was “eager” to do so.
He is expected to do so tonight in a speech to the Americans to outline the text.
In particular, the agreement will allow the suspension for two years, until January 1, 2025, i.e. the period after the presidential elections of November 2024, the maximum borrowing limit of the American public ($31.4 trillion).
In return, Democrats agreed to cut spending in various categories, except for the military and veterans, but not as much as Republicans would like to see.
“Much more to be done”
That is why several officials opposed the draft law, both in the House of Representatives and in the Senate.
“Make no mistake, there’s still a lot to be done” to clean up the US budget, said Senate Republican Baron Mitch McConnell.
The left wing of the Democrats, on the other hand, was upset by the changes in some of the conditions for the granting of social welfare benefits and especially food aid.
Influential Senator Bernie Sanders specifically emphasized that his “conscience” does not allow him to “vote a bill that harms workers.”
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