Biden signs bill to increase US national debt ceiling

President Joe Biden signed into law, expanding the US government debt ceiling and preventing a potential default on government debt. This significant step was the result of months of political negotiations and includes a number of key measures, reflecting economic and political dynamics within the country. In this article, we will take a closer look at the key points and implications of this decision., which, As expected, will lead to some changes in the US economic landscape.

Key points

• • US President Joe Biden signed the bill, extending the public debt ceiling by two years, averting an economically catastrophic default ahead of Monday.
  • Law “About fiscal responsibility 2023 of the year” suspends the public debt limit until 1 January 2025 of the year, after the presidential election 2024 of the year.

Chronology

1. • • In January, Joe Biden refused to negotiate with the representative of the Republicans, Kevin McCarthy, relative to the debt ceiling, insisting that, that the House of Representatives should pass the so-called “clean” bill without any spending cuts or policy proposals.
     • New Republican Speaker of the House of Representatives, McCarthy, Said, that the House will not vote to increase the debt ceiling without significant budget cuts. Despite splits within the Republican Party, McCarthy was able to convince his narrow majority to vote for the bill., offering budget cuts in exchange for raising the debt ceiling.
     • The passage of this bill in the House of Representatives forced Biden to sit down at the negotiating table, which led to many weeks of lively discussions, closed at the end of last month. The agreement was reached just a few days before the deadline 5 June.

Conclusions and implications

• • The bill caps spending for the next two years and includes conservative measures to return about 28 billion dollars of unspent funds for Covid relief
    • also cancels 1,4 billion dollars of IRS funding and redirects approximately 20 billion of 80 billion dollars, which the IRS received through the Inflation Reduction Act, for non-military funding.
    • Besides, Law Resumes Federal Student Loan Payments After Long Pause, that began with the start of the pandemic, and adds job requirements for people up to 55 years for Supplemental Nutrition and Temporary Assistance for Needy Families, with exceptions for veterans and the homeless. current threshold – 50 years.
    • This law may have only a minor impact on the US economy., insofar as, according to various estimates, government spending will be only slightly reduced over the two years of the deal, which will create a small impact on the overall economic result, measured by gross domestic product.
    • Some analysts say, what, despite the deal's limited macroeconomic impact, it could usher in a new era of tighter fiscal policy, as congressional legislators will face a national deficit, which increased during the Covid-19 pandemic.
    • Economists at Goldman Sachs expect, that the deal would reduce federal spending on 0,2% from gross domestic product per year for two years of the transaction.
    • However, the analyst said, that the deal could mark the beginning of an era of austerity, defined as a set of economic policies, for debt control.

Eventually, US debt ceiling extension law has led to a series of important economic and political consequences. Despite, that he averted a potentially catastrophic default on the public debt, the law also introduced a number of measures, aimed at reducing costs and taxes, what, As expected, lead to some job losses and a moderate slowdown in GDP growth.

Although immediately after the signing of this law, the macroeconomic effect may be limited, it may well mark the beginning of a new era of tighter fiscal policy. This could include further spending cuts and deficit reduction efforts., which could ultimately lead to more significant changes in the US economy in the coming years.

Generally, this law is an important step in the management of US public finances and the impact on the economy of the country. He highlights the importance of debt management and the impact of fiscal policy on the overall health of the economy..