The U.S. Congress has saved the government from imminent default and a possible financial crisis. The solution comes at the last minute.
WASHINGTON – The bitter debt dispute between the Democrats and Republicans in the United States has come to an end. At almost the last minute, the U.S. Congress had prevented the imminent default of the government late Thursday evening (local time) by the House of Representatives and then the Senate in Washington approved a bill. It states that the national debt ceiling in the US will be suspended until 2025.
Agreement in U.S. debt dispute: New law averts government default
Without the new law, the U.S. would have run out of money in a few days, and the country would have been insolvent as early as Monday for the first time in its history. Until recently, Republicans and Democrats under US President Joe Biden had struggled to find a compromise. Many are not satisfied with the solution, but are still relieved. After all, insolvency was pursued with great trembling not only in the USA, but internationally. There was great concern about a global economic crisis.
US President Joe Biden. Here at the State of the Union address at the U.S. Capitol. (Archive photo) © Jacquelyn Martin/AP POOL/dpa
"In negotiations, no one gets everything they want, but make no mistake: this bipartisan agreement is a huge win for our economy and the American people," President Biden wrote in an initial reaction on the social network Twitter. Now all that's missing is his signature to put the law into effect. This part is considered a mere formality, but Biden promised to sign the law by Friday and then wants to address the nation with a speech. Senators of both parties had prevented a default with their votes, Biden continued. "Together, they have proven once again that America is a nation that pays its bills and lives up to its obligations — and always will."
U.S. default averted: Democrats and Republicans pull together
The background to the dispute was that the US had already reached the statutory debt limit of 31.4 trillion dollars (around 29.4 trillion euros) in January. Since then, the government has been preventing a default with so-called extraordinary measures, but the possibilities have almost been exhausted. Treasury Secretary Janet Yellen announced the imminent default starting Monday.
The meeting room of the House of Representatives in the Capitol. © J. Scott Applewhite/AP/dpa
The Republicans then demanded cuts in government spending and at the same time rejected the Democrats' proposal for greater taxation of the rich. US President Biden's Democrats, on the other hand, accused the Republicans of risking an economic disaster just to make a political name for themselves.
Many Democrats and Republicans, meanwhile, are dissatisfied with the new law. While Democrats criticize many cuts in the social sector, they do not go far enough for some right-wing Republicans. Nevertheless, there is great relief that insolvency and thus consequences of global proportions have been averted. According to Senate Democratic Majority Leader Chuck Schumer, the compromise averted a "catastrophic" economic collapse. It is therefore good that the two political camps have finally pulled together after long discussions. (nz/dpa/afp)