US debt drama ends: government default prevents children from killing: how “baby gangs” terrorize Italy

An imminent bankruptcy of the US government has been averted. After the House of Representatives, the Senate in Washington also approved a bill late Thursday evening (local time) that temporarily suspends the national debt ceiling in the US. Without the move, the U.S. government’s money would run out in a matter of days. The final vote in Congress brought to an end a long political nail-biter that had raised major concerns about an economic crisis in the US and beyond. To the end, President Joe Biden’s Democrats had fought bitterly with the Republicans to find a compromise.

A bankruptcy of the world’s largest economy could have sparked a global financial crisis and economic downturn. The political impasse in Washington therefore caused unrest on the stock markets.

The voice

A bipartisan majority in the Senate voted to pass the bill, which would suspend the debt ceiling until 2025 and limit government spending for the next two years. Sixty-three of the 100 senators helped the draft get the required majority, including 46 Democrats and 17 Republicans. The compromise ensures that the government does not go bankrupt within days. US Treasury Secretary Janet Yellen recently warned that this dramatic event could happen on Monday. So the solution only came about shortly before the deadline.

Senate Majority Leader Chuck Schumer expressed his relief. “We avoided a catastrophic bankruptcy,” he said. The Democrats in particular would have crossed the finish line – because more Democrats than Republicans would have voted for the deal in both chambers of Congress.

The U.S. House of Representatives passed the bill Wednesday night, also by a cross-party majority. After the final vote in the Senate, President Biden must now sign the law to take effect. However, this is considered a formality. Immediately after the vote, Biden announced that he would sign the law as soon as possible and address the American people directly on Friday night (local time, 1:00 a.m. CEST on Saturday). Biden emphasized that senators from both parties have prevented a default with their votes. “Together, they have proven once again that America is a nation that pays its bills and honors its obligations — and always will.”

Pulling for it

The background to the debt drama: In the US, parliament sets a debt ceiling at irregular intervals and thus determines how much money the state can borrow. This time, the proceedings degenerated into bitter partisan bickering and ideological trench warfare between Democrats and Republicans.

The Republicans, who have had a majority in the House of Representatives since January, refused for weeks to raise the debt ceiling and demanded major cuts in government spending. They argued that government spending was uncontrollable and at an irresponsible level. The Democrats, on the other hand, accused the Republicans of risking economic disaster just to make themselves known politically.

The agreement

Biden and Republican Speaker of the House of Representatives Kevin McCarthy had engaged in difficult negotiations over the past few weeks to reach a cross-party compromise and only presented a deal last weekend. This effectively freezes the size of the federal budget that Democrats wanted to increase under Biden. The budgets of many federal agencies and ministries are being adjusted for this. The Republicans could also force recipients of certain social benefits to prove a job. The Democrats actually wanted to increase state revenues by taxing the rich more heavily. On the other hand, Republicans are bracing themselves.

Many Democrats and Republicans are unhappy with the deal. Left-wing Democrats complain about cuts in the social sector. For right-wing Republicans, the cuts don’t go far enough. And many moderate politicians from the middle of both parties are not enthusiastic at all. In the face of the imminent dramatic fallout of bankruptcy, enough congressmen from both camps eventually voted in favor of the deal, securing the necessary majority in parliament.

“Nobody gets everything they want in a negotiation,” Biden said. However, the bipartisan agreement is a major victory for the American economy and the American people. (oee/sda/dpa)