US House Set To Vote On Crucial Debt Ceiling Suspension
Legislation to address the urgent issue of the U.S. debt ceiling has reached a crucial stage, with President Joe Biden and House Speaker Kevin McCarthy brokering a deal to lift the $31.4 trillion debt limit and implement federal spending cuts.
As the deadline looms, the focus now shifts to the US House of Representatives as the US house set to vote on crucial debt ceiling suspension. The outcome of this vote holds significant implications for the nation's economy and financial stability.
The bill successfully cleared an important hurdle on Tuesday, as the House Rules Committee voted 7-6 to approve the rules allowing for full chamber debate. However, two committee Republicans, Representatives Chip Roy and Ralph Norman, opposed the bill, highlighting the need for Democratic support to secure its passage in the House, where Republicans hold a narrow majority.
Once passed in the House, the bill will move on to the Senate for further consideration. It is imperative for the measure to receive congressional approval before June 5, as the Treasury Department could potentially run out of funds to pay its debts for the first time in U.S. history.
Failing to meet debt payments or prioritizing payments could have severe repercussions, causing economic turmoil not only within the United States but also globally. President Biden and Speaker McCarthy are confident in securing sufficient votes to pass the 99-page bill into law before the June 5 deadline.
US House of Representatives holds final vote of debt ceiling bill – as it happened
According to the non-partisan Congressional Budget Office, the legislation, if enacted into law, would result in a $1.5 trillion reduction in spending over the next ten years starting in 2024.
Furthermore, it is estimated that interest on the public debt would decrease by $188 billion.
The number of Democrats needed to secure the anticipated vote on passage on Wednesday remains uncertain, especially as all four Democrats on the Rules Committee voted against the bill, a common occurrence when it comes to Republican-backed legislation.
Despite the challenges, Democratic Leader Hakeem Jeffries has pledged his party's support for Speaker McCarthy, potentially swaying other Democrats to follow suit. Many Democrats had previously insisted on Republicans lifting their hold on enacting a debt limit bill before engaging in budget-cutting negotiations with President Biden.
The battle in the Senate is yet to come. White House Budget Director Shalanda Young, one of President Biden's lead negotiators, has urged Congress to pass the bill. She emphasized that the agreement represents a compromise, requiring difficult decisions and acknowledging that not everyone will get everything they desire.
The Senate vote could potentially extend into the weekend if lawmakers in that chamber attempt to slow its passage. Republican Senator Mike Lee has already expressed the intention to do so, and other Republicans have voiced reservations about certain aspects of the deal.
The bill, if enacted, would suspend the U.S. debt limit until January 1, 2025, allowing President Biden and lawmakers to postpone the politically sensitive issue until after the November 2024 presidential election.
It would also impose spending caps over the next two years, expedite the permitting process for select energy projects, reclaim unused COVID-19 funds, and introduce work requirements for certain food aid programs targeting impoverished Americans.
Additionally, the bill would redirect some funding away from the Internal Revenue Service, although the White House has reassured that this would not compromise tax enforcement.
Both sides can claim some victories in the deal. President Biden's landmark infrastructure and green-energy laws would largely remain intact, and the spending cuts and work requirements fall short of the extent Republicans had initially sought.
Republicans argue that significant spending cuts are necessary to curb the growth of the national debt, which currently stands at $31.4 trillion, roughly equivalent to the annual output of the economy. Government forecasts indicate that interest payments on the debt will consume a larger portion of the budget as healthcare and retirement costs rise due to an aging population.
However, the current deal does not address the growing expenses associated with these programs.
The debt-ceiling standoff has prompted ratings agencies to caution that they might downgrade U.S. debt, a pillar of the globalfinancial system. Thus far, markets have responded positively to the agreement, indicating a sense of relief and optimism.