The US is running away from the axe. The House of Representatives passed a key document

The budget happy end in the US is getting closer. On Wednesday evening, Polish time, the House of Representatives signed a bill to suspend the public finance debt limit until 2025. However, the law also contained spending cuts in two subsequent budgets.

The US is running away from the budget ax

314 congressmen voted for the bill, 117 voted against. However, two more steps are needed to finally resolve the problem. Now the bill, approved by the House of Representatives, has been sent to the Senate, which should also consider it. If the Senators also approve the bill, the final step would be President Joe Biden’s signature. Since he personally participated in the formation of the project, which he called “compromise”, it should be assumed that he will sign the act immediately. However, time is short. Everything must be done by June 5th.

The law assumes that the United States will significantly reduce its spending in the next two years. Investment in 2024 should be frozen, with the exception of defense spending, which will increase by 1 percent. Under the assumptions of the project, this is a reduction in US debt by $1.5 trillion over 10 years.

USA on the brink of technical bankruptcy

The US problem began on January 19, when the legal debt limit was exceeded, after which it is impossible to raise funds using debt instruments.

Due to divisions in Congress, the United States has since faced a stalemate in which public finances have been effectively frozen. The law does not allow exceeding the statutory debt limit of $31.4 trillion, or about 120 percent. income.

The Treasury Secretary launched the special measures and wrote in a letter to Congress that they should rescue the economy from technical bankruptcy by June 5, 2023. By this point, the stalemate in the House of Representatives should have ended. “As I indicated in my letter of January 13, the period for which emergency measures may be sufficient is subject to considerable uncertainty. I respectfully urge Congress to act quickly,” Janet Yellen said in a letter.

Negotiations until the last minute

Politicians were supposed to come to an agreement by early June. Otherwise, the US will lose the ability to redeem its bonds, which will be tantamount to technical bankruptcy.

Speaker of the House Kevin McCarthy was named to the last straight talks from the Republican Party, and President Joe Biden from the power camp.

After many months of meetings and negotiations on the night of May 27-28, the politicians came to an agreement. The president called it a “compromise” and a Republican spokesman called it “historic spending cuts.”