Days before the largest economy in the world is scheduled to begin defaulting on its debt, the House of Representatives has approved a deal to allow the US to borrow more money.
Despite some defections from both sides of the aisle, the measure easily passed the chamber by a vote of 314-117.
President Joe Biden cannot sign the bill into law until the Senate votes on it later this week.
On June 5th, according to projections, the government will reach its borrowing cap.
There is now little room for error as lawmakers scramble to prevent a US default on the $31.4 trillion debt that supports the global financial system.
In the event of a default, the government would be unable to repay its debts in full or borrow any more money.
The global economy would also be in danger of suffering, which would have an impact on international prices and mortgage rates.
The 99-page bill to raise the debt ceiling was approved by the House on Wednesday night with the help of 165 Democrats and 149 Republicans, receiving the necessary simple majority.
A deal had been difficult to reach for weeks due to the fact that Democrats are in control of the White House and upper chamber of Congress while Republicans are in control of the lower chamber.
However, over the weekend, President Biden and House Speaker Kevin McCarthy signed a bipartisan compromise.
Mr. Biden expressed gratitude to the Speaker in a statement and emphasized that he had negotiated in good faith.
“Neither side got everything it wanted,” said the president. “That’s the responsibility of governing.”
The deal suspends the debt ceiling, a congressionally imposed spending cap that determines how much money the government can borrow, until January 1, 2025.
According to the nonpartisan Congressional Budget Office, the legislation would save $1.5tn over the course of a decade.
To prevent a default from happening this weekend, Democratic and Republican Senate leaders are working to get a bill to Vice President Biden for his signature.
The last time the US came this close to exceeding its debt ceiling, in 2011, the rating of the country was downgraded by the credit rating agency Standard and Poor’s, a decision that has yet to be overturned.
Source-BBC
