Monday, November 29

The US Senate agrees to an expansion of the spending ceiling


Washington Correspondent

Updated:

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The great crisis in the US spending ceiling is postponed, but only for the time being. Democrats and Republicans in the US Senate reached an agreement Thursday night by which extend the national debt limit until December 3, thus preventing the US from defaulting on its debt on October 18, which was the deadline estimated by the Treasury Department for this expansion.

Finally, the Republicans gave in to pressure from President Joe Biden and agreed to expand the spending ceiling, given the catastrophic possibility that the US could not pay its creditors, something that would cause a full-blown recession. The negotiations, led by Conservative leader Mitch McConnell, lasted into the night.

The agreement allows raise the debt ceiling by about $ 480 billion (415,000 million euros), something that allows the government to continue operating until December 3. As of August 2021, the country’s public debt amounts to 28,427 trillion dollars.

Moody’s Analytics has predicted that failing to raise the spending ceiling in the midst of a pandemic would cost the US economy up to six million jobs, cause losses of $ 15 trillion, and cause the unemployment rate to rise to about 9%, from 5.2% current.

The public debt increased eight trillion under Donald Trump, But the Republicans were reluctant to allow Biden and the Democrats to increase that debt limit, especially in the context of other tax negotiations.

In principle, the Democrats could have approved this expansion alone, but with an arduous process that would take time and long negotiations. There is also a centrist faction that is in the middle of a war with the left wing, the so-called progressives, for other spending packages.

Most of the Democrats on Capitol Hill are minimal. They have only eight more seats in the House than Republicans, out of a total of 435. In the Senate, each party has 50 seats, and Vice President Kamala Harris has the tiebreaker vote. But to pass laws in that Upper House, consensus is really needed: 60 votes. There is a complicated mechanism to get around this requirement.

Democrats are divided by a social, health and environmental spending package priced at an estimated $ 3.5 trillion and championed by the left. Biden supports it in principle, but the more moderate Democratic senators want to cut it in half or less, because it seems, like the Republicans, excessive.

As long as the centrist Democrats do not give in, the left wing, led by Bernie Sanders and MPs like Alexandria Ocasio-Cortez, refuses to pass a $ 1.2 trillion infrastructure package in the House of Representatives that the Republicans do support. They have also conditioned the spending ceiling on that negotiation.

As Karine Jean-Pierre, a spokeswoman at the White House said yesterday, “this is a positive step forward because it gives a respite from the catastrophic non-compliance that we were approaching due to Senator McConnell’s decision to do politics with the economy.”

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