US House passes bill to avert debt default: Senate to process legislation next
The passage of the bill helps the US avert what would have been an unprecedented default on its obligations and an economic crisis.
A rare coalition of centrist Democrats and Republicans came together on Wednesday in the United States (US) House of Representatives to pass the Fiscal Responsibility Act 2023, a legislation that suspends the debt ceiling limit for two years in exchange for spending cuts in the federal budget.
The passage of the bill, a product of an understanding between President Joe Biden and House Speaker Kevin McCarthy, helps the US avert what would have been an unprecedented default on its obligations and an economic crisis. The bill will now go to the Senate where it is expected to pass smoothly.
Overcoming objections from far-Right Republicans, who argued that the spending cuts did not go far enough, and progressive Democrats, who argued that the spending cuts went too far and objected to debt ceiling negotiations itself, 314 Congressional representatives voted for the bill. Among them were 149 Republicans and 165 Democrats. But 71 Republicans and 46 Democrats voted against the bill.
The US had hit its debt limit of $31.4 trillion on January 19. While the Treasury Department had resorted to extraordinary measures since then, it had warned that a failure to suspend the debt limit by June 5 would result in the Us defaulting on its obligations. After prolonged negotiations, Biden and McCarthy struck a deal on Saturday.
This rested on Republicans agreeing to suspend the limit till 2025 and Democrats agreeing to add work requirements in case of certain categories of welfare recipients, returning unspent funds from the pandemic relief package, cutting additional funding for tax enforcement, and enabling easier permissions for energy projects, among other measures.
In a statement, Biden said, “The House took a critical step forward to prevent a first-ever default and protect our country’s hard-earned and historic economic recovery. This budget agreement is a bipartisan compromise. Neither side got everything it wanted. That’s the responsibility of governing.”
Thanking McCarthy, Biden reiterated that his agreement with the Republicans protected “key priorities and accomplishments” of the past two years, including the spending commitments under the Inflation Reduction Act, Social Security, Medicare, and Medicaid. “I urge the Senate to pass it as quickly as possible so that I can sign it into law, and our country can continue building the strongest economy in the world,” Biden said.
McCarthy hailed the vote as a win and claimed that he had pushed the Democrats to engineer the “greatest savings” in American history. In a statement, the House Republican leadership said, “Taxpayers will save an estimated $2.1 trillion, and Congress will spend less money next year than this year for the first time in a decade — without adding new taxes on families.”