National bankruptcy averted: Biden suspends debt ceiling until 2025

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With his signature, US President Joe Biden has finally averted impending bankruptcy of the US government. Biden signed into law on Saturday temporarily suspending the federal debt ceiling, the White House said in Washington. Congress had previously voted in favor of the project after a long and bitter battle to reach a bipartisan compromise. Biden seized the agreement as an opportunity to call for cooperation between Democrats and Republicans.

The law, which can now enter into force with Biden’s signing, provides for the debt ceiling to be suspended until 2025. It was last around $31.4 trillion (about $29.1 trillion). At the same time, government spending will be limited for the next two years. The deal 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 money would run out on Monday

Without this law, the government would run out of money on Monday, the finance ministry said. A bankruptcy of the world’s largest economy could have sparked a global financial crisis. Many Democrats and Republicans are unhappy with the deal. In view of the imminent dramatic fallout, enough congressmen from both camps eventually voted for the deal, securing the necessary majority in parliament.

In a highly symbolic appearance, Biden celebrated the averting of bankruptcy on Friday evening (local time) and warned that impartial cooperation cannot be ignored in dramatic situations like this. “It couldn’t have been more at stake,” the Democrat said in an address to the nation from the Oval Office at the White House. “We have avoided an economic crisis and an economic collapse.”

“The economy would have entered a recession”

It was Biden’s first official address to the nation from the Oval Office since taking office nearly two and a half years ago. Such speeches from the president’s office at government headquarters, broadcast live on US television during prime time, are a rarity and are usually reserved for major situations and crises. Biden now used the special stage to make everything clear after weeks of invoked catastrophe scenarios and strike a conciliatory tone despite the upcoming presidential election in a politically deeply divided country.

The US Congress averted the government’s inability to pay at the last minute by passing the debt bill on Thursday. In the US, parliament sets a debt ceiling at irregular intervals and thus determines how much money the state can borrow. Biden again described which cliff the United States narrowly avoided: “Our economy would have plunged into recession,” he said. “Eight million Americans would have lost their jobs.” The creditworthiness of the country would be destroyed. “It would have taken years to get out of this hole.”

Forgiving tones

Biden specifically thanked Republican Speaker of the House of Representatives Kevin McCarthy, with whom he had personally negotiated a compromise in several rounds of negotiations. He and McCarthy got along well, were direct and honest with each other, and both sides kept their word. In the political climate in the US, in which Democrats and Republicans – especially on the fringes of both parties – are sometimes downright hostile to each other, such tones are rare these days.

Working together across party lines is hard, Biden said, but he stressed, “We should never stop trying. Because in situations like this, which we just had to deal with, in which the US economy and the world economy are in danger of collapsing, there is no other option.” However great the differences in content, the parties should not see each other as opponents. , but as fellow citizens. They must treat each other with respect and work together for the good of the country. Referring to the compromise, he said: “Nobody got everything they wanted, but the American people got what they needed.” (SDA)

Source: Blick