An unprecedented US debt default has been averted, with President of the United State of America, Joe Biden, signing a bill yesterday to suspend the US debt limit up to January 1, 2025. The Biden Administration had time until June 5 to reach a deal.
The bill enables the government to raise its USD31.4 trillion debt limit and continue borrowing to pay the existing debts. It was essential to have this deal stitched up, because without the ability to borrow more, the US would have defaulted on its bills, which include Social Security payouts, Medicare, and military pensions. Such a default would not only be unthinkable, but also catastrophic for the global economy.
After signing the deal, Biden tweeted: “I just signed into law a bipartisan budget agreement that prevents a first-ever default while reducing the deficit, safeguarding Social Security, Medicare, and Medicaid, and fulfilling our sacred obligation to our veterans.”
There was a series of tweets on the subject of this bill. A message on the @POTUS handle said: “It was critical to reach an agreement, and it’s very good news for the American people. No one got everything they wanted. But the American people got what they needed.”
Indeed, the US missed a debt default by a whisker, because Treasury Secretary Janet Yellen had said that the country could run out of money to pay its bills by June 1. Later, she revised the “X date” — the date till which the world’s biggest economy could afford to pay its bills — to June 5, referring to money reserves.
On May 26, Yellen wrote to the United States House of Representatives Speaker, Kevin McCarthy, who is a member of the Republican party, saying: “We now estimate that Treasury will have insufficient resources to satisfy the government’s obligations if Congress has not raised or suspended the debt limit by June 5.”
The extension of a few days gave President Biden, who is a Democrat, the scope of sealing the bipartisan deal. Now, with the signing of the 99-page bill, not only has Biden averted a debt default, but he is also free not to worry about the national debt until the 2024 US Presidential elections, in which he is going for a re-run.
With the default prevented, Biden praised McCarthy and his team of negotiators, stating, “They acted responsibly, and put the good of the country ahead of politics.”