The United States on Thursday averted a first-ever default on its debt after the Senate passed a bill raising the borrowing limit by $480 billion. The bill, which passed with bipartisan support, now heads to President Joe Biden for his signature.
The debt limit is the total amount of money that the federal government is authorized to borrow. The United States has never defaulted on its debt, but it came close in 2011 and 2013. A default would have had a devastating impact on the economy, causing interest rates to rise, stock markets to fall, and the value of the dollar to decline.
The passage of the debt deal is a relief to markets and businesses, which had been bracing for a default. However, the deal does not address the underlying problem of the country’s growing debt. The United States is on track to add $1.3 trillion to its debt this year, and the debt is now over $30 trillion.
Key Provisions of the Debt Deal
The debt deal includes the following key provisions:
- The debt limit is raised by $480 billion.
- The deal includes a bipartisan committee of lawmakers who will be tasked with finding ways to reduce the deficit.
- The deal includes a provision that would allow the Treasury Department to use certain accounting measures to prevent default if the committee is unable to find a deficit reduction plan.
Reactions to the Debt Deal
The passage of the debt deal was met with mixed reactions. Some praised the deal as a necessary step to avoid a default, while others criticized it as a temporary fix that does not address the underlying problem of the country’s growing debt.
President Biden praised the deal, saying that it “ensures that the United States will continue to meet its financial obligations and avoid a catastrophic default.” He also called on Congress to work together to address the country’s long-term debt problem.
Republican leaders also praised the deal, saying that it was a “responsible compromise” that avoided a default. However, they also said that they were disappointed that the deal did not include more deficit reduction measures.
Democrats were more critical of the deal, saying that it did not go far enough to address the country’s debt problem. They also said that the deal was a sign of weakness by President Biden, who they said had caved to Republican demands.
Implications of the Debt Deal
The passage of the debt deal has several implications for the United States. First, it avoids a default, which would have had a devastating impact on the economy. Second, it provides the government with some breathing room to address the country’s long-term debt problem. Third, it sets up a bipartisan committee to find ways to reduce the deficit.
However, the debt deal is a temporary fix, and the country will need to address its debt problem in the long term. Otherwise, the United States could face another debt crisis in the years ahead.
The passage of the debt deal is a positive development for the economy. However, the country still faces a long-term debt problem. The United States needs to find a way to reduce its debt and deficits in order to avoid another debt crisis in the years ahead.