The debt ceiling bill, negotiated by President Biden and Republican House Speaker Kevin McCarthy, has passed its final hurdle in the Senate. The measure was carried by 63 votes to 36 and was approved in the House of Representatives on May 31st.
The Debt Ceiling Explained
The debt ceiling is the amount of money that the government is allowed to borrow, and prior to this week’s agreement, it was fixed at $31.4 trillion. The government sought to increase that fibure in order to pay the nation’s bills, but required the support of Republicans in Congress. The GOP, led by Kevin McCarthy, refused to give its backing unless the White House committed to spending cuts – a conflict that caused a standoff between the two sides as the Biden administration refused to agree to Republican demands, particularly regarding placing conditions on some welfare benefit entitlements.
Governments have raised the debt ceiling 89 times, under both Democratic and Republican Presidents. If the US cannot pay its debts owing to a freeze in borrowing, it risks defaulting – which could in turn cause a major financial crisis globally and a recession in the United States. Treasury Secretary Janet Yellen warned the two parties in Congress that an agreement must be reached by June 1st.
What Happened This Week
The terms of the new deal were hailed as a triumph by both sides. The Democratic Leader of the Senate Chuck Schumer said hat America could “breathe a sigh of relief,” adding that the deal’s main purpose was to avoid a default.
“The consequences of default would be catastrophic,” Schumer also said, while his Republican counterpart Mitch McConnell called the agreement “an urgent and important step in the right direction for the health of our economy and our country.”
Some Senators sought to include amendments in the bill as there was not full agreement across the board, but these were rejected as it meant the legislation would be sent back to the House, causing enough delay to risk missing the deadline.
The final agreement keeps non-defense spending capped until 2025 and the Congressional Budget Office said this will save $1.5 trillion. Around $30 billion will be saved as unspent Covid funds are recalled and the new rules will also make it easier for energy projects to receive licenses. The deal also establishes that the age that people must work to receive food stamps will increase from 49 to 54.
Jack Buckby is 19FortyFive’s Breaking News Editor. He is a British author, counter-extremism researcher, and journalist based in New York. Reporting on the U.K., Europe, and the U.S., he works to analyze and understand left-wing and right-wing radicalization, and reports on Western governments’ approaches to the pressing issues of today. His books and research papers explore these themes and propose pragmatic solutions to our increasingly polarized society.