He President of the United States, Joe Bidensigned this Saturday the bill that authorizes raising the debt limit. The ceiling was raised to $31.4 billion, avoiding what would have been the first default in history.
The The House of Representatives and the Senate approved the law. this week after Biden and the Speaker of the House of Representatives, kevin mccarthyThey reached an agreement after tense negotiations. The Treasury Department had warned that it would not be able to pay all of its bills on 5th June if Congress did not act by then.
The announcement was made on prime time television and behind the historic desk in the Oval Office. So, in a live broadcast, Biden assured that he bipartisan agreement It was a compromise that “nobody got what they wanted”. In the United States, presidents always reserve the renowned hall for moments of grave danger or national importance.
The law that was reached
Congress this week adopted a bill that suspends the federal debt ceiling until January 2025, enough to get through the 2024 presidential elections without repeating the fight. It was the result of weeks of arduous negotiations between Biden and the Republican leader of the House of Representatives, Kevin McCarthyin which the Democrats accused the Republicans of taking the US economy as hostage by insisting on cutting spending to accompany the increase in the debt limit.
Said standard sets certain limits on federal spending and foresees a reduction of US$10,000 million in the funds assigned to the treasury to modernize and intensify controls. “Find a consensus beyond partisan differences is difficult. Unity is hard but we should never stop tryingthe 80-year-old Democrat said in his short speech.
without the agreement, The United States risked a default or cessation of payments of its obligations from Monday, June 5, the deadline set by the Treasury. This would probably have triggered the panic in the marketshuge job losses and a recession, with global implications. “Nothing would have been more irresponsible or more catastrophic”said the president.
Negative impact despite agreement
Despite the fact that the House of Representatives and the Senate put aside their differences and found an agreement at the last moment, the reputation of the economy of USA was seen affected.
The rating agency fitch keeps on negative observation credit rating “AAA” of United Stateswhich it plans to review in the third quarter of 2023. The agency said in a statement that it is evaluating “all implications of the latest episode of risky policies and the medium-term outlook for fiscal and debt trajectories”.