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Washington (AFP) – The US Senate voted Thursday to suspend the federal borrowing limit, after weeks of tense negotiations with just four days to go before the deadline to avert the threat of a disastrous default.
First modification: Last modification:
Economists warned that the country could run out of liquidity to pay its debts on Monday, leaving a narrow margin for the enactment of the Fiscal Responsibility law, which extends the country’s borrowing authorization until 2024, in exchange for a cut in federal spending. .
The upper house of Congress approved the bill after the House of Representatives processed it, so there will be no confrontation over the debt issue until after the presidential elections.
The agreement, negotiated directly by US President Joe Biden and the Republicans, was approved in the Senate with a comfortable majority of 63 to 36.
“No one gets everything they want in a negotiation, but make no mistake, this bipartisan deal is a huge win for our economy,” Biden said in a statement on social media.
He further said he would enact the law “as soon as possible” and will address the country on Friday.
Senate Majority Leader Chuck Schumer said the country could “breathe a sigh of relief” after avoiding a “catastrophic” economic collapse.
“However, for all the ups and downs and twists it’s taken to get here, it’s great for this country that both sides have finally managed to avoid default,” he added.
The measure – which now goes to Biden’s office to be signed – ended with an intense tug of war between the leaders of each party and members of the caucuses, who had threatened the passage of the project with last-minute arguments about the details.
Democratic leaders spent months warning of the havoc the first moratorium in US history could wreak, including the loss of millions of jobs and an estimated $15 trillion in household wealth, as well as higher mortgage prices and other loans.
defense funds
The latest drama of the night came after a series of failed votes on amendments requested in particular by Republicans, who at one point threatened to delay the process, adjourning it.
The senators decided to offer 11 modifications to the 99-page text, many of which were related to financing their projects – from border control and trade with China, to taxes and the environment.
Defense hawks angered by the Pentagon spending limit, adjusted to Biden’s requested budget of $886 billion, threatened to derail the entire approval process.
They ultimately agreed to the offer of a separate bill that would fund Ukraine’s defense against Russian invasion and advance US national security interests in the Middle East and in the face of China’s threat against Taiwan.
politically toxic
The debt limit has been raised more than 100 times to allow the government to meet its spending commitments, usually without drama and with the support of both Democrats and Republicans.
Both sides view raising the debt limit as politically toxic, but acknowledge that failure to do so would plunge the US economy into recession, also rattling world markets.
Republicans had hoped to use this debt expansion to criticize what they see as excessive spending by the Democratic government ahead of the 2024 presidential election, although the increases in the debt ceiling only cover commitments already made by both sides.
House Speaker Kevin McCarthy, Republican, said the weeks-negotiated bill was a great victory for conservatives, though he ran afoul of his more radical supporters who accused him of making too many concessions.
He fell short by one of the 150 votes – two-thirds of his caucus – that he had promised to get in the lower house, and he needed Democratic votes to get the bill through the Senate.
Among Democrats, the vote was hailed as a huge victory for Biden, who managed to shield nearly all of his domestic priorities from cuts threatened by Republicans.
“This legislation protects the full faith and credit of the United States and preserves our financial leadership, which is critical to our economic growth and stability,” said US Treasury Secretary Janet Yellen.
