US Democratic President Joe Biden and Republican House of Representatives Speaker Kevin McCarthy have reached a final agreement to raise the US debt limit, allowing the US government to avoid default. Citing a source, the AP reported today. The two politicians announced the preliminary agreement on Sunday night. If the Democrats and Republicans fail to find an agreement, the US would be at risk of default as early as June 5, which would have serious implications for the global economy.
The big haggle
Biden and McCarthy spoke again today, according to the AP, while other negotiators are trying to use their compromise to draft a bill that could be passed by both houses of the House of Representatives, where Republicans have a majority, and the Senate, which is controlled by Democrats, in the coming days.
Biden had already on Saturday strongly urged both houses of Congress to pass the deal as quickly as possible. But some politicians in both parties are showing their displeasure. Some Republicans have already threatened in advance to block any proposal that fails to meet their expectations, including sharp spending cuts. Progressive Democrats, for their part, do not want a deal that would affect federal anti-poverty programs.
A new playground for politicians
The debt limit is an amount approved by Congress that determines how much money the federal government can borrow for day-to-day operations, and therefore for paying the government’s bills. This includes such things as government employee salaries, military funding, payments for Social Security and Medicare, as well as interest payments on government bonds. For decades, raising this limit was a routine matter, but in recent years it has become policy.
The government hit the current limit of $31.4 trillion (about CZK 690 trillion) in January. But the finance ministry used emergency measures to allow the government to draw more money.
source: ČTK
