congressmen approve increase in the federal debt ceiling in order to avoid catastrophic default

congressmen approve increase in the federal debt ceiling in order to avoid catastrophic default

2023-06-01 12:08:51

The US House of Representatives voted on Wednesday (31) in favor of raising the federal debt ceiling, which brings the country one step closer to avoiding the threat of a catastrophic default, five days before the end of the period determined by the Treasury.

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With information from RFI and AFP

There were 314 in favor and 117 votes against. Lawmakers overwhelmingly voted in favor of the deal that will allow the government to borrow to pay its debts in exchange for lower budgetary spending, reports the correspondent of the RFI in Washington, Guillaume Naudin, thus removing the threat of a ‘default’ that could happen on the 5th of June, when the cashiers would be at zero.

Decided between Democratic President Joe Biden and House Republicans, the measure suspends the debt ceiling until 2024, slightly cutting government spending next year.

“Passage is a crucial first step in getting America back on track,” said Speaker of the House Kevin McCarthy, the top Republican in Congress. “The measure does what is responsible for our children, what is possible in a divided government and what our principles and commitments demand.”

Biden hailed the 314-to-117 pass as “a critical step” to safeguard the country’s post-pandemic economic recovery, achieved through a “bipartisan compromise”.

McCarthy supporters had spent the last few hours frantically chasing votes, while top Democrats vowed their members would put the country’s finances above the temptation to undermine their opponents.

political clash

The vote came after weeks of tough negotiations between Biden and McCarthy, with Democrats accusing Republicans of holding the US economy “hostage” by insisting on spending cuts to keep up with the debt ceiling increase.

The bill suspends the debt ceiling until 2025, long enough to get through next year’s presidential election period. In exchange, some expenses are limited to remain stable – except military ones – in 2024 and the increase is limited to 1% until 2025. The text also foresees a reduction of US$ 10 billion (R$ 50.5 billion) in the funds allocated to the Tax Authorities to modernize and intensify controls throughout the country.

McCarthy’s office explained that the agreement provides for the recovery of “billions of dollars in resources intended to combat the Covid pandemic that were not spent”, without disclosing details. One of the points of contention involves changes in the requirements for access to some social benefits.

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