The US House of Representatives on Wednesday narrowly approved a bill to raise the government’s $31.4 trillion debt ceiling, including sweeping spending cuts over the next 10 years.
The bill is not expected to pass the Senate, and even if it is passed there, President Joe Biden will veto it, using the right of veto.
But the support for the bill – which came mostly from the Republican Party, with the approval of 217 deputies and the rejection of 215 – represents a victory for Republican House Speaker Kevin McCarthy in a case that shook investors and markets.
McCarthy now hopes to coax Biden into negotiating spending cuts, even as the White House and Congressional Democrats insist on increasing the debt limit without conditions.
And the Treasury could find itself unable to pay its bills within weeks if Congress does not act.
The United States has nearly $32 trillion in debt, a figure that has been accumulating under presidents belonging to both major parties for decades.
US Treasury debt is the basis for evaluating safe assets in the world, and its interest rates are the basis for pricing products and financial transactions around the world.
A standoff in 2011 led to a downgrade of the government’s credit rating, which then led to higher borrowing costs and a hurricane of investments.
White House press secretary Karen Jean-Pierre said Biden would not sign off on such cuts.
“President Biden will not force the middle class and working families to bear the burden of tax cuts for the wealthy, as the bill does,” she added in a statement.
“The president has made clear that this bill has no chance of becoming law,” she said.
Senate Democratic leader Chuck Schumer told reporters that the House bill “died on its way” to the Senate, and that the Republican action “only brings us dangerously close” to a historic debt default that would rattle markets and economies. all over the world.
Democrats – who control the Senate by 51 votes – also lamented the drastic spending cuts the measure could bring to programs such as health care for the poor and other programs including law enforcement and airport security operations.
Reuters
