- An impending insolvency of the US government has been averted.
- After the House of Representatives, the Senate also approved a bill that would temporarily suspend the federal debt ceiling in the United States.
- Without the move, the US government would have run out of money in a matter of days.
With the final vote in Congress, a long political nail-biter, which had triggered great concerns about an economic crisis in the USA and beyond, ended. To the very end, President Joe Biden’s Democrats had fought bitterly with the Republicans to find a compromise.
Failure to pay would have far-reaching consequences
A default by the world’s largest economy could have triggered a global financial crisis and an economic downturn. The political impasse in Washington had therefore also caused unrest on the stock exchanges.
Legend:
Both chambers of the US Congress in Washington approved the bill.
AP Photo/J. Scott Applewhite
The US House of Representatives passed the bill on Wednesday evening. After the final vote in the Senate, President Biden now has to sign the law in order to put it into effect. However, this is considered a mere formality. The US debt ceiling will be suspended until January 2025. This means that the next possible debt dispute will fall after the next presidential election.
Compromise for more debt
SRF USA correspondent Andrea Christen says it’s a compromise like the one that emerges in Washington when the two parties share power. “But this compromise does not balance the budget,” he notes, “that would require much larger spending cuts – or tax increases. So the United States must continue to incur debts.” The national debt of the United States is now 31.4 trillion US dollars.