Deal on US debt ceiling: how we got here
After a weeks-long deadlock, a bipartisan agreement to increase the debt ceiling and prevent a “disastrous” default is headed to the US debt || امریکی قرضCongress.
DC, Washington The White House and congressional leaders in the US have reached an agreement to raise the debt ceiling; lawmakers must now pass it into law before the US defaults on its debts after weeks of negotiations and dire predictions of impending economic disaster.
It took months for the situation to develop and for a solution to be found. They date back to the November 2022 midterm elections, in which President Joe Biden’s Democratic Party lost its independence when Republicans won a slim majority in the US House of Representatives.
READ list of three items, list one of three.
- Biden claims that the Congress has received the final US debt ceiling agreement.
- Biden and McCarthy agree to lift the US debt ceiling in a tentative agreement. 3 of 3
- Deal on raising the US debt ceiling is nearly complete as default threatens.
The deal reached by Biden and Kevin McCarthy, speaker of the Republican-controlled House, would suspend the debt ceiling for two years while capping government spending.
Additionally, it would increase funding for the Pentagon, impose new limitations on getting food benefits, redirect some monies from the Internal Revenue Service (IRS), the US tax authority, and simplify the licencing process for energy projects.
The agreement, which would prevent a much-feared default, accomplished some of the Republican party’s goals of reducing government spending without materially altering how Biden’s administration runs the country.
Al Jazeera examines the debt ceiling’s rise to prominence and what comes next.
How much debt can you have?
The US relies on tax revenue and borrowing to pay its financial responsibilities, like the majority of other nations. This include paying off previous debts as well as funding social projects, the military, and the salaries of public employees. However, US law imposes a cap on the amount that the government can borrow, known as the debt ceiling. Congress is required to increase that cap every few years. At the moment, it is $31.4 trillion.
Over the years, the debt ceiling has been lifted numerous times. The legislative procedure frequently go forward without incident. McCarthy, though, asked for policy changes in exchange for raising the cap this year. Legislation must be approved by the House and the Senate in order for the government to increase its borrowing capacity. Following the election in November, Republicans gained control of the House of Representatives, giving them the authority to veto legislation.
The White House initially advocated against Republicans using the debt ceiling as a negotiating tool. Officials from the Biden administration emphasized that politicians must make sure that the US pays its debts. New spending commitments are not authorized under the debt limit. It only enables the government to fund current legal commitments that Congresses and presidents of both parties have made in the past, according to a factsheet from the Department of the Treasury.
Republicans, though, pushed for a connection between the debt ceiling and government spending, which they contend has gotten out of hand under Biden.
The stalemate thus started early this year.
Concerns over the US’s ability to have money to operate while also avoiding a default on its prior debts—which would undermine confidence in the American government as a borrower—rose as the government got closer to its borrowing limit.
McCarthy’s bid to become speaker
It’s possible that Republican internal politics had a role in the deadlock. After a number of far-right legislators blocked McCarthy’s effort to become speaker of the House in January, it took 15 rounds of voting for him to win. McCarthy had to accept some of their ultraconservative policies, such as committing to restrict government spending, in order to win over the Republican dissidents.
Democrats expected that the Republican party’s internal strife, which was made clear by the speakership race, would result in a debt ceiling impasse.
In a tweet at the time, Congresswoman Ilhan Omar stated, “McCarthy just agreed to a deal with far-right insurrectionists that will hold the whole US and world economy hostage to harsh austerity.to everything from housing to education, healthcare, Social Security and Medicare.”
McCarthy proposed a debt limit increase in April that would accomplish three important Republican policy goals: controlling government spending over the next ten years, eliminating Biden’s student loan forgiveness programme, and cutting IRS funding. Later in the month, House Republicans barely passed that legislation without any Democratic support. But when it reached the Democratic-controlled Senate, the bill was already dead.
Talks begin
The Biden administration referred to the debt ceiling as a “non-negotiable” issue at the beginning of the year. White House press secretary Karina Jean-Pierre stated in January that “raising the debt ceiling is not a negotiation; it is an obligation of this country and its leaders to prevent economic chaos.” Instead of discussing the government’s borrowing capacity, Biden indicated he would be happy to talk about the budget and specific spending.
But as time ticked away on a potential default and Republicans showed no signs of being inclined to unconditionally lift the limit, Biden met with legislative leaders, including McCarthy, at the White House on May 9.
All during the month, Biden and McCarthy would have direct and indirect conversations. The president returned to the negotiations earlier in May after cutting short a trip to Japan to take part in the G7 summit.
In a letter to McCarthy this week, Treasury Secretary Janet Yellen expressed concern that if the debt ceiling dispute was not resolved, the government may be broke by June 5.
Yellen stated that failing to extend the debt ceiling would be extremely difficult for American households, damage our standing as a global leader, and cast doubt on our capacity to protect our national security interests.
The president praised the progress as a major step that “takes the threat of catastrophic default off the table” after McCarthy and Biden revealed a tentative agreement on Sunday after multiple rounds of negotiations.
What follows is what?
The Fiscal Responsibility Act of 2023, a measure reflecting the agreement, must now be passed by Congress. Although there was opposition, its drafters anticipated that it would pass.
Both liberal and conservative politicians have expressed doubts about the deal. Senator Rand Paul, a conservative, referred to the budget caps as “fake spending cuts” made by “fake conservatives.”
The plan, according to Republican Congressman Matt Rosendale, “fails to cut spending and continues to fund the radical agenda of the Democrats and Biden Administration,” and he vowed to vote against it in a statement.
Republican congresswoman Nancy Mace also declared that she opposed the bill.
Congresswoman Pramila Jayapal, who also serves as the chair of the Congressional Progressive Caucus, told CNN that it is “bad policy” to cut the IRS’s funding and impose additional restrictions on food assistance.
When asked if progressives would oppose the legislation, Jayapal responded that House leaders have “to worry” about that possibility.
Before a final vote on Wednesday, the House is debating the bill on Tuesday. Later this week, it will be discussed in the Senate, which is under Democratic control.
Reference :
https://www.theepochtimes.com/
https://www.minnpost.com/national/2023/01/whats-the-debt-ceiling
