The impending debt ceiling crisis is a major step closer to being averted.
Key Takeaways
- President Joe Biden and House Speaker Kevin McCarthy reached a tentative agreement to raise the debt ceiling for two years.
- The deal could avert the government defaulting on its debts if the Senate and the House of Representatives pass it before the U.S. runs out of money to pay its bills, which could be as soon as June 5.
- The last-minute deal reportedly holds nonmilitary discretionary spending roughly flat at current levels for fiscal year 2024 and raises it 1% in 2025.
President Joe Biden and House Speaker Kevin McCarthy reached an agreement to raise the national borrowing limit for two years.
The deal still must pass the Republican-controlled House of Representatives and the Democrat-controlled Senate if the government is to avoid running out of cash to pay its bills and potentially miss making certain payments—a date that could come as soon as June 5, Treasury Secretary Janet Yellen has warned.
In January, the national debt overtopped the $31.4 trillion debt limit set by Congress. The country has continued paying bills on borrowed time ever since by shuffling payments and using other tactics the Treasury calls “extraordinary measures.”
Under the terms of the deal, the debt limit would be raised for two years, meaning it would not be reached again until after the 2024 election. Nonmilitary spending would stay flat in fiscal 2024 and rise 1% in 2025. The deal also expands work requirements on able-bodied adults to receive food stamps up to age 54 from 49, with waivers for veterans and those experiencing homelessness.
If the deal goes through and the debt limit is raised before the government runs out of cash, it will be the fourth time since 1995 that the government has narrowly avoided defaulting on its payments.
Even if it’s ultimately resolved, the latest debt limit standoff has rattled financial markets and caused a major credit agency to warn it may downgrade the credit rating of the government.
Source: https://www.investopedia.com/biden-mccarthy-agree-to-two-year-deal-to-raise-debt-ceiling-7504629?utm_campaign=quote-yahoo&utm_source=yahoo&utm_medium=referral&yptr=yahoo