The US Senate approved on Thursday night the suspension of the federal debt limit, after weeks of tense negotiations and just four days before the deadline to avoid the threat of a disastrous ‘default’. .
Economists warned that the country could run out of liquidity to pay its obligations from Monday (5), which left a narrow margin for the enactment of the Fiscal Responsibility Law, which extends the country’s debt authorization until 2024, in exchange for a cut in federal spending.
The US Senate approved the bill after the text was discussed in the House of Representatives, which means that the debt issue will only return to the political debate after the 2024 presidential elections.
The deal, negotiated directly by President Joe Biden with Republicans, passed the Senate by 63 votes to 36.
“Nobody gets everything they want in a negotiation, but make no mistake: this bipartisan agreement is a huge victory for our economy and the American people,” Biden said in a statement posted on social media.
He also said he would enact the law “as soon as possible” and address the nation on Friday.
Senate Majority Leader Chuck Schumer said the country can “breathe a sigh of relief” after avoiding a “catastrophic” economic meltdown.
“However, with all the ups and downs, twists and turns, it took to get here, it’s so good for the country that the two parties were able to unite to avoid default,” he added.
The bill — which is heading to Biden’s office for enactment — ended a day of intense negotiations between party leaders and members of the caucuses, who had threatened to pass the bill quickly with last-minute complaints about the details.
Democratic leaders spent months warning of the collapse that the first ‘default’ in US history could provoke, including the loss of millions of jobs and nearly $15 trillion in household wealth, as well as rising mortgage costs and of other loans.
– Resources for Defense –
The last sticking point of the night came after a series of failed votes on amendments – tabled in particular by Republicans – which at one point threatened to delay the process, which could be postponed to the weekend.
Senators decided to introduce 11 changes to the 99-page text, many related to funding levels for their preferred projects – from border control and trade with China, to taxation and the environment.
Defense Department funding politicians, angered by limits on Pentagon spending adjusted to Biden’s proposed $886 billion budget, have threatened to derail the text’s approval process.
In the end, they agreed on a proposal for a separate bill that would provide funds for Ukraine’s defense against Russian invasion and promote US national security interests in the Middle East and in the face of China’s threat against Taiwan.
– Politically toxic –
The debt limit has been raised more than 100 times to allow the government to meet its spending commitments, generally without protest and with the support of Democrats and Republicans alike.
The two parties consider that raising the debt limit is politically toxic, but recognize that not adopting the measure would lead the American economy to a recession, with catastrophic effects for world markets.
Republicans had hoped to use the debt increase as a campaign tool and criticize what they see as excessive Democratic government spending ahead of the 2024 presidential election, although the debt ceiling increases only cover commitments already made by the two parties.
Kevin McCarthy, the Republican speaker of the House of Representatives, said the bill, negotiated for several weeks, was a big win for conservatives, despite criticism he received from far-right lawmakers who accused him of many concessions.
He was one vote short of the 150 votes – two-thirds of his caucus – that he had promised to get in the House and needed the Democratic votes for the initiative to advance to the Senate.
Among Democrats, the vote was received as a major victory for Biden, who managed to protect almost all of his domestic priorities from the cuts threatened by Republicans.
“This legislation protects the full faith and credit of the United States and preserves our financial leadership, which is critical to our economic growth and stability,” said US Treasury Secretary Janet Yellen.
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