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Legislative bills

Bipartisan Legislation Passes to Lift US Debt Ceiling, Avoiding Default

Strategic Insights

— 1 min read

The US Senate voted 63-36 to approve a bipartisan bill lifting the government's $31.4 trillion debt ceiling, averting a potentially disastrous default. The legislation, backed by President Joe Biden, was pushed through Congress after months of partisan bickering between Democrats and Republicans. Treasury Secretary Janet Yellen had warned that failure to act would leave the government unable to pay all its bills by June 5.

Key Takeaways:

  • The bipartisan legislation suspends the statutory limit on federal borrowing until January 1, 2025, averting a potential default.
  • The bill was approved by the Senate with a 63-36 vote, following a 314-117 vote in the Republican-controlled House on Wednesday evening.
  • Republicans won about $1.5 trillion in reductions over 10 years, down from their initial bid of $4.8 trillion in savings over a decade.
  • The nonpartisan Congressional Budget Office estimated the bill would save $1.5 trillion over 10 years, below Biden's proposed $3 trillion in deficit reduction.
  • Senate Majority Leader Chuck Schumer stated, "We are avoiding default tonight," emphasizing the importance of timely action.
  • Biden praised Congress' prompt action, saying, "This bipartisan agreement is a big win for our economy and the American people."

Statistics:

  • The US government's debt ceiling stands at $31.4 trillion, with Treasury having used "extraordinary measures" to patch together the money needed to pay the government's bills since January.
  • The bill would save $1.5 trillion over 10 years, with the nonpartisan Congressional Budget Office estimating this amount.
  • The Treasury Department had warned that failing to act on the debt ceiling would have serious ramifications, including sending shock waves through global financial markets and raising families' interest rates.
  • 314 members of the House vote in favor of the bill, while 117 oppose it.

Sources:

  • The White House
  • The US Treasury Department
  • Senate Majority Leader Chuck Schumer
  • House Speaker Kevin McCarthy
  • US News and World Report
  • CNBC
  • The Washington Post

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