The US has temporarily emerged from the debt ceiling crisis.

This result was achieved after weeks of tense negotiations between the White House and House Speaker Kevin McCarthy, providing the US with a temporary sigh of relief as the debt default deadline approached.

According to the bill, the debt ceiling will be suspended until the first quarter of 2025, which is after the 2024 presidential election.

Instead of raising the debt ceiling (currently at $31.4 trillion) to a specific figure, postponing the ceiling allows Congress more time before resuming discussions on this thorny issue. Such a move also helps ensure the debt ceiling issue is not exploited in election campaigns.

Another notable issue is limiting government spending. According to CBS News, Republicans initially demanded that spending be capped at fiscal 2022 levels for the next 10 years, while also calling for significant cuts to domestic spending unrelated to defense. Meanwhile, the White House proposed maintaining spending at fiscal 2023 levels for the next two years.

House Speaker Kevin McCarthy held a press conference after the House passed the debt ceiling bill in Washington, D.C., on May 31. (Photo: REUTERS)

According to the agreement, spending for fiscal year 2023 will not revert to 2022 levels. Furthermore, spending for fiscal year 2024 will remain at the same level as 2023. By 2025, the agreement allows for an increase in non-defense spending of approximately 1%.

According to CNN, in addition to curbing spending, the bill would protect veterans' healthcare benefits, temporarily expand job requirements for certain adults receiving food assistance, recover some unused funds from COVID-19 relief funds, and restart student loan repayment programs…

After passing the House of Representatives, the bill is now sent to the Senate, currently controlled by the Democratic Party. Leaders from both parties want senators to pass the bill within 48 hours. After that, the bill will be sent to President Biden's desk before the expected default deadline of June 5th.

According to CNN , analysts believe the agreement will have little impact on the US economy . Specifically, some estimates suggest that government spending will only decrease slightly during the two years of the agreement, resulting in a small but negative impact on GDP.

Mark Zandi, chief economist at Moody's Analytics (USA), believes this is only a moderate setback for a stagnant economy and is unlikely to push the US into recession.

Some analysts also point out that the agreement could usher in a new era of tighter fiscal policy as US lawmakers grapple with a soaring national deficit in the years following the COVID-19 pandemic.

Economists at Goldman Sachs (USA) expect that, thanks to the agreement, federal spending will decrease by the equivalent of 0.2% of GDP each year for the two years of the agreement.

Source: https://nld.com.vn/thoi-su-quoc-te/my-tam-thoat-khoi-khung-hoang-tran-no-cong-20230601213541986.htm