The bill would eradicate the hurdle of another default crisis for the rest of Joe Biden’s term, suspending the debt ceiling until 1st January 2025. In exchange the democrats agreed to cap federal spending into 2025, likely forcing some cutback in the government services provided the present annual inflation rate of 5%.
House of Representatives passed the debt-limit legislation drafted by President Joe Biden and Speaker Kevin McCarthy allowing imposition of restraints on government spending through the 2024 election and avoiding a catastrophic US default.
Representatives from both parties joined to pass the bill with 314-117 on Wednesday evening; sending the bill further to the Senate for approval as the default deadline draws near. The vote solidifies Biden’s reputation for pragmatism and working across the party lines as he contests for election next year for a 2nd term and allows as well Kevin McCarthy to claim victory in his first major test as the speaker of the House.
The proposal won the support of 2/3rd of the House Republicans; a major show of confidence for Kevin McCarthy, whose narrow GOP majority leaves him open to problems from discontented members. But the proposal finally received more votes from the Democratic minority than the GOP majority, a fact conservative critics will use to say that the speaker made a bad deal
The passing of the bill marked a rare moment of bipartisan accord in a divided Washington. President Joe Biden called the House vote “good news for the American people and the American economy”. Investors already largely gauged the hurdle of a US default past and are focusing on other challenges that are more likely to affect growth, such as another possible Federal Reserve interest- rate increase and signs of a weakening Chinese economy.
The debt bill would suspend the US debt ceiling until January 1, 2025, eliminating the risks of a second default crisis for the remainder of Joe Biden’s presidency. In return. Democrats agreed to a spending cap that will last until 2025, which will probably necessitate some service cuts from the government given the current yearly inflation rate of 5%.
The bill has now been forwarded to the US Senate, where passage is likely imminent, and only timing is in doubt. John Thun. The law could be passed by Friday night, well in advance of the default deadline of June 5th, according to the No. 2 Republican in the Senate on Wednesday.
