In a crucial move to prevent a looming financial crisis, the US Congress has approved a bipartisan deal to lift the country’s borrowing limit, avoiding a default on its debt. The measure, which passed through the Senate with a vote of 63-36 following its clearance in the US House of Representatives, is now awaiting President Joe Biden’s signature to become law. The approval of this bill, valued at $31.4tn (£25tn), will spare the US from a catastrophic default that could have had severe global consequences.
Failure to raise the debt ceiling would have severely limited the government’s ability to borrow money and fulfill its financial obligations, potentially wreaking havoc on international markets and affecting prices and mortgage rates worldwide. The bill received support from both Democrats and Republicans, with 44 Democrats, 17 Republicans, and two independents voting in favor of it. However, four Democrats, including prominent senators Bernie Sanders, John Fetterman, and Elizabeth Warren, voted against the measure.
The deal, which suspends the debt ceiling until January 1, 2025, was reached after weeks of negotiations between President Biden and House Speaker Kevin McCarthy. Although the bill drew objections from both right-wing Republicans and left-wing Democrats, there were enough centrist politicians in both parties to secure its passage. The legislation is expected to result in $1.5tn in savings over the next decade, according to the independent Congressional Budget Office.
The approval of the debt deal has had a positive impact on US stock markets, with the Dow closing 0.5% higher, the S&P 500 rising by 1%, and the Nasdaq ending the day 1.3% higher. This outcome provides much-needed relief for the US economy and financial stability on a global scale.
Source: BBC