US President Joe Biden signed the bill on Saturday that would raise the debt ceiling. This prevents the US from being unable to meet its financial obligations.
Last week, a majority in the US House of Representatives and the Senate also approved a broader limit. The proposal has now been worked out, after which Biden could sign it.
The debt ceiling determines how much the United States federal government can borrow. The Americans had already passed that limit this year and without adjustment, the Treasury Department would run out of money next Monday.
As a result, the US would no longer be able to pay many benefits, but also, for example, no interest on government debt. The latter would mean chaos on the financial markets.
Biden delivered a speech from the Oval Office at the White House on Friday for the first time since becoming president two years ago. He then stated that a “crisis has been averted”. Typically, US presidents reserve a speech from the Oval Office for the most important and dramatic events such as the September 11, 2001 attacks or the explosion of the Space Shuttle Challenger.
Needs Republican approval
Democrat Biden and Republican Speaker of the House of Representatives Kevin McCarthy had already reached an agreement on the debt ceiling last Saturday. But that deal also had to get the approval of the US Congress, where the conservative wing of the Republicans in particular believed that more cuts were needed.
Now that both chambers of the House of Representatives have agreed, a next vote on a debt ceiling increase will not be needed until after the 2024 US presidential election.
Division can lead to a worse credit rating
Raising the debt ceiling is usually a routine job in the US, but tensions between Republicans and Democrats make it increasingly difficult. Credit rating agency Fitch has therefore become more gloomy about the financial health of the United States.
The rating agency now takes into account that the credit rating of the US government will soon be downgraded. Now the US still has the highest score. A lower score means that lending money to the US is seen as riskier, which means that Americans may have to spend more on interest rates.
2023-06-03 18:18:11
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