Castastrophy averted as the U.S. senate vote to pass debt deal. Was there any real doubt a deal would be made?
The U.S. Congress has approved a deal to lift the country’s borrowing limit, just days before the world’s largest economy was due to default on its debt.
Vote 63-36
The bipartisan agreement quickly passed through the Senate by a vote of 63-36, a day after it cleared the U.S, House of Representatives.
£31.4 trillion debt pile
President Joe Biden has said he will sign the measure into law and that the enacting of the bill will prevent the U.S. from a catastrophic default on its $31.4tn debt and thus prevent world financial systems going in to meltdown.
The U.S. was forecast to overshoot its current debt ceiling on 5th. June. A default would restrict the government’s ability to borrow money or pay its bills. It would also threaten to wreak havoc across other financial markets, affecting prices and mortgage rates in other countries.
With Republicans in control of the lower chamber of Congress and Democrats holding power in the Senate and White House, a deal proved elusive for weeks until the President and House Speaker Kevin McCarthy found a compromise last weekend.
Too easy to borrow – more debt please
The agreement suspends the debt ceiling, the spending limit set by Congress that determines how much money the government can borrow, until 1st January 2025.
Was there ever any real doubt of a deal being made? I don’t think so. There was far too much at stake if the U.S. failed. But I can’t help thinking that there always appears to be is an element of pantomime attached to the proceedings. That’s politics for you I guess.
However, in 2011 the U.S. came very close to a default, prompting Standard & Poor, the rating agency, to lower the country’s financial status rating – and it has remained there since.
More debt please!