USA Debt Dispute: Congress Prevents Default

The imminent bankruptcy of the US government was averted. After the House of Representatives, the Washington Senate also approved one late Thursday evening (local time). A bill suspends the federal debt ceiling in the United States for the time being. Without the move, the US government could have run out of money in a matter of days. With the final vote in Congress, a long political harassment, which had raised great concerns about an economic crisis in the United States and abroad, came to an end. Until the end, the Democrats, led by President Joe Biden, fought hard with the Republicans to reach a compromise.

A default by the world’s largest economy could have triggered a global financial crisis and economic downturn. Consequently, the political impasse in Washington caused turmoil in the stock exchanges.

Biden’s signature: My formality

Sixty-three of the 100 senators have now voted in favor of the bill, which would suspend the debt ceiling until 2025 while capping government spending over the next two years. Thus, the necessary majority was achieved in the Congressional chamber. This ensures that the government will not go bankrupt within a few days. US Treasury Secretary Janet Yellen recently warned that this dramatic event could happen on Monday. So the solution was not reached until shortly before the deadline.

The US House of Representatives passed the bill on Wednesday night. After the final vote in the Senate, President Biden must now sign the law in order to take effect. However, this is only a formality.

Many Democrats and Republicans alike are unhappy with the deal. Left-wing democrats complain about cuts in the social sector. For right-wing Republicans, cuts aren’t enough. And many moderate politicians in both parties are not at all enthusiastic. Given the looming dramatic consequences of default, enough members of Congress from both camps voted in favor of the deal, thus gaining the necessary majority in Parliament.

(AFP/Roy)View comments