US Congress averts default by approving debt-limit suspension

US Congress averts default by approving debt-limit suspension

WASHINGTON  -The U.S. Senate has successfully passed a bipartisan bill, supported by President Joe Biden, which raises the government's debt ceiling of $31.4 trillion. This development averts the unprecedented possibility of a default. With a vote of 63-36, the Senate approved the bill that had previously been passed by the House of Representatives on Wednesday. This achievement comes after months of political disputes and disagreements between Democrats and Republicans, as lawmakers worked against time constraints.

By passing the legislation, the United States Senate has successfully prevented a potential default as warned by the Treasury Department. Senate Majority Leader Chuck Schumer expressed relief, stating that they were able to avoid a default. President Joe Biden commended the timely action of Congress and referred to the bipartisan agreement as a significant victory for the American people and the economy. He announced his intention to promptly sign the bill into law and indicated that he would provide further remarks on the matter on Friday.

In the lead-up to the final vote, senators vigorously debated and rejected numerous amendments during a late-night session in anticipation of the approaching Monday deadline.

The newly passed legislation suspends the statutory limit on federal borrowing until January 1, 2025. Unlike many other developed nations, the United States imposes a restriction on the government's borrowing capacity, irrespective of approved legislative spending.

Senate Majority Leader Chuck Schumer and Minority Leader Mitch McConnell, representing the Democrats and Republicans respectively, fulfilled their commitment to expedite the bill, which had been negotiated between President Biden and Republican House Speaker Kevin McCarthy.

Schumer expressed relief and stated that Americans could now breathe a sigh of relief in his Senate address.

Republicans had previously obstructed the passage of any increase in the debt limit until they secured significant spending cuts, aiming to address the escalating national debt.

President Joe Biden advocated for tax increases on the wealthy and corporations to address the growing debt, but Republicans refused to consider such tax hikes. Social Security, Medicare, military, and veterans' programs were protected from cuts, leaving domestic discretionary programs vulnerable. Republicans aimed for $4.8 trillion in savings over a decade but ultimately secured about $1.5 trillion in reductions.

The Treasury had been using "extraordinary measures" since January to cover expenses. Both Biden and congressional leaders recognized the severe consequences of a debt default, including global market shocks, job losses, and increased interest rates. The bill passed in the Republican-controlled House and Senate, averting the risk of default.

Amendments, including border controls and defense spending increases, were debated but ultimately rejected. The legislation saves an estimated $1.5 trillion over ten years, lower than Biden's proposed $3 trillion deficit reduction. The negotiations between Biden's team and Republican House Speaker Kevin McCarthy's aides took weeks to reach a bipartisan deal.

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