American politicians are actively working on a bill that will increase the debt limit of public finances. The day after the decision of the House of Representatives, the Senate addressed the issue.
US technical bankruptcy is less likely. A day after the House of Representatives passed a bill to increase the national debt limit and change the budgets for the next two years, the Senate referred to it.
The US will not go bankrupt, but will cut spending
The law assumes that the United States will significantly reduce its spending in the next two years. Investment in 2024 should be frozen, with the exception of defense spending, which will increase by 1 percent. Under the assumptions of the project, this is a reduction in US debt by $1.5 trillion over 10 years.
After passing the vote on the night of May 31 to June 1 by the House of Representatives, the bill entered the Senate. June 2 also brought a decision to the second chamber of Congress. The key decision was passed by 63 votes to 36.
This means that only the signature of President Joe Biden is needed to go into effect and technically preserve public finances. This is almost certain, since he personally agreed on the content of the legal act.
USA on the brink of technical bankruptcy
The US problem began on January 19, when the legal debt limit was exceeded, after which it is impossible to raise funds using debt instruments.
Due to divisions in Congress, the United States has since faced a stalemate in which public finances have been effectively frozen. The law does not allow exceeding the statutory debt limit of $31.4 trillion, or about 120 percent. income.
The Treasury Secretary launched the special measures and wrote in a letter to Congress that they should save the economy from technical bankruptcy by June 5, 2023. By this point, the stalemate in the House of Representatives should have ended. “As I indicated in my letter of 13 January, the period for which emergency measures may be sufficient is very uncertain. I respectfully urge Congress to act quickly,” Janet Yellen said in a letter.
Negotiations until the last minute
Politicians were supposed to come to an agreement by early June. Otherwise, the US will lose the ability to redeem its bonds, which will be tantamount to technical bankruptcy.
Speaker of the House Kevin McCarthy was named to the last straight talks from the Republican Party, and President Joe Biden from the power camp.
After many months of meetings and negotiations on the night of May 27-28, the politicians came to an agreement. The president called it a “compromise” and a Republican spokesman called it “historic spending cuts.”
Source: Wprost
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