U. S. Congress prevented default by raising debt limit

2023.06.02 00:58

U. S. Congress prevented default by raising debt limit

By Kristina Sobol  

Budrigannews.com – This prevents the government from defaulting for the first time ever by lifting the $31.4 trillion debt ceiling through bipartisan legislation that was supported by President Joe Biden.

The Senate casted a ballot 63-36 to support the bill that was passed on Wednesday by the Place of Delegates, as legislators attempted to beat the odds following a long time of sectarian quibbling among leftists and conservatives.

If Congress did not act by June 5, the Treasury Department had warned it would not be able to pay all of its bills.

As he guided the bill through his 100-member chamber on Thursday, Senate Majority Leader Chuck Schumer said, “We are avoiding default tonight.”

Biden thanked Congress for taking prompt action. The Democratic president stated in a statement that he will sign the bipartisan agreement into law as soon as possible. “This bipartisan agreement is a big win for our economy and the American people,” he added. He said he would say something else on Friday.

Senators rejected nearly a dozen amendments prior to the final vote in a late-night session in anticipation of Monday’s deadline.

With this regulation, as far as possible on government acquiring will be suspended until Jan. 1, 2025. The United States, in contrast to the majority of other developed nations, restricts the amount of debt that the government can borrow, regardless of any spending that the legislature allocates.

Both Schumer and his Republican counterpart, Minority Leader Mitch McConnell, kept their promise to do everything in their power to move the bill that Biden and Republican House Speaker Kevin McCarthy had negotiated forward as quickly as possible.

In a speech to the Senate, Schumer stated, “America can breathe a sigh of relief.”

In a move that they claimed would begin addressing the rapidly increasing national debt, Republicans had obstructed the passage of any increase in the debt limit until they secured some extensive spending reductions.

Instead, Biden advocated for corporate and wealthy tax increases to assist in addressing the mounting debt. Republicans were against any kind of tax increase.

McCarthy refused to consider cutting spending on the military or veterans, and both parties prevented cuts to the vast Medicare and Social Security retirement and healthcare programs.

That left a fairly thin band of homegrown “optional” projects to endure the worst part of expenditure cuts. In the end, Republicans obtained reductions totaling approximately $1.5 trillion over a ten-year period, which may or may not be fully realized. Their initial offer called for ten-year savings of $4.8 trillion.

In practice, Treasury reached its borrowing cap in January. Since then, it has patched together the funds required to pay the government’s bills by employing “extraordinary measures.”

All of the leaders in Congress, including Vice President Biden and Treasury Secretary Janet Yellen, acknowledged that a debt default caused by a lack of funds would have serious consequences. Among these were raising families’ interest rates on everything from credit card debt to home mortgages and sending shock waves through global financial markets, which could lead to job losses and a recession in the United States.

Schumer effectively expressed that idea even as he directed the bill toward conclusive entry.

He stated, “Almost certainly would cause another recession” in the event of default. It would be a bad dream for our economy and a huge number of American families. Recovery from that would take years and years.”

The bill was approved on Wednesday evening by a vote of 314 to 117 in the Republican-led House. Republicans made up the majority of those who voted against the bill.

Schumer stated on Thursday that the Senate does not have the luxury of time. A risk that is unnecessary and even dangerous would be any unnecessary delay or holdup in the last minute.”

Some of the amendments up for discussion included ones that would prevent a West Virginia energy pipeline from being quickly approved and others that would force deeper spending cuts than those in the House-passed bill.

As a large number of immigrants cross the U.S.-Mexico border, Republican Senator Roger Marshall offered an amendment to impose new border controls. “Putting an end to the culture of lawlessness at our southern border,” he stated about his measure.

However, the amendment was defeated by the Senate. According to Democrats, it would eliminate safeguards for children migrating from other countries and deprive American farmers of necessary labor.

Beyond the increased amounts in the bill that was passed by the House, some Republicans also wanted to increase defense spending.

Accordingly, Schumer said the spending covers in this regulation wouldn’t compel Congress in supporting extra cash for crises, remembering helping Ukraine for its fight against Russia.

Schumer stated, “This debt ceiling deal does not limit the Senate’s ability to appropriate emergency supplemental funds to ensure our military capabilities are sufficient to deter China, Russia, and our other adversaries, and respond to ongoing and growing national security threats, including Russia’s evil ongoing war of aggression against Ukraine.” Russia’s war of aggression against Ukraine is one of the ongoing threats.

Senior aides to Biden and McCarthy engaged in intense negotiations for weeks to come up with the bill.

The main disagreement was over how much money Republicans wanted to cut from discretionary programs like housing, environmental protections, education, and medical research over the next few years.

The bill would, according to the nonpartisan Congressional Budget Office, save $1.5 trillion over ten years. This is lower than Biden’s proposed deficit reduction of $3 trillion, primarily through new taxes.

The last time the US came this near default was in 2011. That deadlock pounded monetary business sectors, prompted the very first downsize of the public authority’s credit score and pushed up the country’s getting costs.

This time, there was less drama because it was clear last week that Biden and McCarthy would come to an agreement that had enough support from both parties to pass Congress.