The deal proposes to suspend the debt ceiling until January 1, 2025, past the next presidential election, in exchange for cuts in federal spending and curbs on welfare programs for low-income families
US President Joe Biden urged the Senate to pass the bill as quickly as possible.
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After a tense month-long stand-off, in a show of support, the Democrats and the Republicans, in an overwhelming majority, voted to raise the United States’ debt limit, currently $31.4 trillion, to pave the way for the treasury to borrow and meet debt obligations and avert an unprecedented debt default that could trigger a major global economic downturn.
In a statement, President Joe Biden said, “Neither side got everything it wanted. That’s the responsibility of governing. I want to thank Speaker McCarthy and his team for negotiating in good faith.” Biden urged the Senate to pass the bill as quickly as possible. The US Treasury cautioned it would be unable to pay bills if the debt ceiling isn’t raised or suspended by June 5.
This was not an easy to deal to seal. Reportedly, many Republicans were unhappy that there were too few spending restrictions in the agreement in exchange for raising the debt limit. On the other hand, Democrats were miffed with provisions, for example, relating to restarting student loan repayments, conditions for federal food aid, and an Appalachian natural gas line.
“This agreement is good news for the American people and the American economy. It protects key priorities and accomplishments from the past two years, including historic investments that are creating good jobs across the country. And it honors my commitment to safeguard Americans’ health care and protect Social Security, Medicare, and Medicaid. It protects critical programs that millions of hardworking families, students, and veterans count on,” Biden said in the statement.
In a nutshell, the 99-page bill proposes to suspend the debt ceiling until January 1, 2025—past the next presidential election—with cuts in federal spending and curbs on aid for low-income families. As per the deal, non-defence spending will remain flat in FY24 and can be hiked by 1 percent in the next fiscal. According to the Congressional Budget Office, the deal could potentially result in $1.5 trillion savings over ten years.