US President Joe Biden and US House of Representatives Speaker Kevin McCarthy on Saturday announced a deal to raise the debt ceiling, dragging the US back from the precipice of default with only a few days to spare.
The US Congress is to vote on the deal to extend the government’s borrowing authority on Wednesday, just shy of the “X-date” on Monday next week when the US Department of the Treasury estimates the government would no longer be able to pay its bills, plunging the world’s biggest economy into turmoil.
Biden said in a statement that the deal was “good news for the American people, because it prevents what could have been a catastrophic default and would have led to an economic recession, retirement accounts devastated and millions of jobs lost.”
Photo: EPA-EFE
McCarthy, who spoke with Biden on Saturday to close the deal, said there was still “a lot of work to do, but I believe this is an agreement in principle that’s worthy of the American people.”
The Republican speaker added he would consult again with the president yesterday and oversee final drafting of the bill.
Raising the debt ceiling — a legal maneuver that takes place most years without drama — enables the government to keep borrowing money and remain solvent.
This year, Republicans demanded deep spending cuts — largely in social spending for the poor — in return for raising the debt ceiling, saying the time had come for bitter medicine to address the country’s mammoth US$31 trillion debt.
Biden said that he would not negotiate over spending issues as a condition for raising the debt ceiling, accusing the Republicans of taking the economy hostage.
Both sides have somewhat climbed down.
According to a source familiar with the negotiations, the deal includes freeing up the debt ceiling for two years, meaning there would be no need for negotiations next year, when campaigning for the presidential election would be in full swing.
The big cuts Republicans wanted are not there, although non-defence spending would remain effectively flat next year, and only rise nominally in 2025, the source said.
There would also be new rules for accessing certain federal assistance programs, although the source said the deal protected Biden’s signature Inflation Reduction Act and student debt relief plan.
Biden said that “the agreement represents a compromise, which means not everyone gets what they want. That’s the responsibility of governing.”
US Secretary of the Treasury Janet Yellen had initially warned of a possible default around Thursday if Congress failed to raise the ceiling on borrowing, but gave lawmakers some breathing room on Friday when she updated the deadline to Monday next week.
Even so, the legislation would still have to clear Congress much faster than the normal timetable for even the most uncontroversial bills.
Under House rules, lawmakers have to be given 72 hours before voting once a bill is presented. And if it passes the House, it then has to go through the US Senate, where Democrats hold the majority.
Airlines in Australia, Hong Kong, India, Malaysia and Singapore yesterday canceled flights to and from the Indonesian island of Bali, after a nearby volcano catapulted an ash tower into the sky. Australia’s Jetstar, Qantas and Virgin Australia all grounded flights after Mount Lewotobi Laki-Laki on Flores island spewed a 9km tower a day earlier. Malaysia Airlines, AirAsia, India’s IndiGo and Singapore’s Scoot also listed flights as canceled. “Volcanic ash poses a significant threat to safe operations of the aircraft in the vicinity of volcanic clouds,” AirAsia said as it announced several cancelations. Multiple eruptions from the 1,703m twin-peaked volcano in
A plane bringing Israeli soccer supporters home from Amsterdam landed at Israel’s Ben Gurion airport on Friday after a night of violence that Israeli and Dutch officials condemned as “anti-Semitic.” Dutch police said 62 arrests were made in connection with the violence, which erupted after a UEFA Europa League soccer tie between Amsterdam club Ajax and Maccabi Tel Aviv. Israeli flag carrier El Al said it was sending six planes to the Netherlands to bring the fans home, after the first flight carrying evacuees landed on Friday afternoon, the Israeli Airports Authority said. Israeli Prime Minister Benjamin Netanyahu also ordered
Former US House of Representatives speaker Nancy Pelosi said if US President Joe Biden had ended his re-election bid sooner, the Democratic Party could have held a competitive nominating process to choose his replacement. “Had the president gotten out sooner, there may have been other candidates in the race,” Pelosi said in an interview on Thursday published by the New York Times the next day. “The anticipation was that, if the president were to step aside, that there would be an open primary,” she said. Pelosi said she thought the Democratic candidate, US Vice President Kamala Harris, “would have done
Farmer Liu Bingyong used to make a tidy profit selling milk but is now leaking cash — hit by a dairy sector crisis that embodies several of China’s economic woes. Milk is not a traditional mainstay of Chinese diets, but the Chinese government has long pushed people to drink more, citing its health benefits. The country has expanded its dairy production capacity and imported vast numbers of cattle in recent years as Beijing pursues food self-sufficiency. However, chronically low consumption has left the market sloshing with unwanted milk — driving down prices and pushing farmers to the brink — while
RSS