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What happens now that the Senate approved the debt ceiling bill?

The bill to suspend the debt ceiling passed both houses and will now head to President Biden’s desk, avoiding a crucial debt default.

The bill to suspend the debt ceiling passed both houses and will now head to President Biden’s desk, avoiding a crucial debt default.

The Senate has approved a bill to suspend the ceiling debt. Following the passage of the bill in the House of Representatives, the Senate rushed to a vote, passing the so-called Fiscal Responsibility Act of 2023 by a vote of 63 to 36.

The US government could have defaulted on its debt for the first time in history as early as June 5. To prevent this, Congress needed to pass legislation to suspend or raise the debt ceiling.

As both houses have already passed the bill and there were no modifications in the Senate, it can now be sent to President Joe Biden to sign it into law and avoid a possible default, which would have serious economic consequences.

What will happen next?

When the President signs the bill, it becomes law.

Once the bill is signed into law, the relevant government agencies, particularly the Treasury Department, will implement the changes. They will take necessary actions to increase the debt ceiling and ensure the government’s ability to borrow funds to meet its financial obligations, including the crucial foreign debt.

The Treasury Department will communicate the successful passage of the debt ceiling bill to financial markets, reassuring investors and stakeholders that the government has averted a potential default.

With the increased debt ceiling, the Treasury Department will have the authority to issue additional debt to cover the government’s ongoing expenses. They will manage the borrowing process, including issuing Treasury bonds and bills, to finance the government’s operations.

Raising the debt ceiling does not address the underlying issue of the government’s long-term fiscal sustainability. Congress and the administration will continue to work on budgetary matters, including addressing spending, revenue, and deficit concerns to ensure the country’s financial stability in the future. This includes the spending cuts that were crucial in gaining Republican support.

The oft-mentioned plan by progressives for Biden to declare the debt ceiling unconstitutional never got off the ground.

These are the cuts demanded by the Republicans

  • Keep non-defence government spending will be kept flat in 2024 and increase it by 1% in 2025
  • Ensure veterans’ medical card remain fully funded
  • Temporarily expand work requirements for certain adults receiving food stamps (until 2030)
  • Claw back unspent covid-19 relief funds
  • Cut Internal Service Revenue Funding
  • Restart student loan payments (no date specified)