US Congress reaches agreement to avoid default risk

On October 7, Democratic and Republican leaders in the US Senate reached an agreement to prevent the scenario of the Government defaulting in the next two weeks.

A bicameral session of the US Congress. Illustration: AFP
A bicameral session of the US Congress. Illustration: AFP

"We have reached an agreement to extend the debt ceiling through early December, avoiding the risk of default later this month," Senate Majority Leader Chuck Schumer said. He expressed hope that the Senate would vote on it on the same day.

The above agreement allows to increase the debt ceiling by $480 billion above the current public debt ceiling of $28.4 trillion. After that, the National Assembly will have several weeks to find an agreement on whether to raise the long-term public debt ceiling or introduce another measure.

According to Mitch McConnell, the top Republican in the Senate, extending the debt ceiling will give Democrats more time to find a long-term solution and will protect the US from a crisis. in short term.

Earlier, US Treasury Secretary Janet Yellen warned that the country will no longer have the financial resources to meet its debt payment obligations after October 18, if Congress does not raise the current public debt ceiling. She said the economy is at risk of falling into recession if the US defaults on its debt. Republican lawmakers opposed the Biden administration's ambitious spending plan amid the COVID-19 pandemic causing the financial crisis, and called for fiscal discipline.

The threat of a government shutdown has become an obsession in budget negotiations in the US Congress. President Biden is pushing for two massive spending packages worth $1 trillion and $3.5 trillion on programs to develop infrastructure and promote social security.

For many years, raising the public debt ceiling has been a controversial issue. The US Congress has raised the debt ceiling several times since it was set, and votes are often bipartisan.

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