America is one signature away from staving off a disastrous default.
The Fiscal Responsibility Act, which freezes the debt ceiling until Jan. 1, 2025 and sets new discretionary spending limits, was approved by the Senate in a 63-36 vote yesterday (June 1). None of the 11 amendments proposed were approved, leaving some lawmakers dissatisfied.
President Joe Biden is expected to sign the bill into law today (June 2) and address the country thereafter. That’s three days ahead of the “X-date” deadline treasury secretary Janet Yellen identified for when America would be unable to borrow more, becoming unable to pay some of its obligations and risking an unprecedented default.
The bill Biden is about to sign will move the fight to raise the $31.4 trillion debt ceiling to after the 2024 elections.
Quotable: The US avoids a default
“America can breathe a sigh of relief because in this process, we are avoiding default. From the start, avoiding default has been our North Star.” —Senate speaker Chuck Schumer in a statement on June 1
The US debt default, by the digits
$31.46 trillion: Current size of the US debt
$1.59 trillion: Discretionary spending cap in fiscal year 2024, a reduction of $12 billion compared to 2023, according to the House Budget Committee
314-117 majority: The House majority the Fiscal Responsibility Act passed with prior to the Senate vote.
$130 billion: Payments the federal government’s scheduled to make in the first two days of June, including money to veterans as well as social security and medicaid payouts, leaving it with “an extremely low level of resources,” according to Yellen
78: How many times Congress has acted to “permanently raise, temporarily extend, or revise the definition of the debt limit,” most recently in 2021. Of these, 49 were implemented under Republican presidents, and 29 were under Democratic presidents.
Opposition to debt ceiling deal in the Senate
Republicans were worried the bill would underfund the Pentagon. Lindsay Graham, the Republican senator from South Carolina, argued the bill lacked sufficient funding for defense and Ukraine. Senate majority leader Chuck Schumer and minority leader Mitch McConnell issued a statement reassuring lawmakers that the Senate would act to appropriate emergency funds to deal with foreign or domestic crisis.
Senate Democrats also aired grievances about clawbacks in unspent covid-19 relief funds, ending the student loan repayment freeze, increasing work requirements for older Americans seeking food aid, and reducing funding made available to the internal revenue services (IRS) to fight tax violations.
One of the amendments that was rejected targeted a provision related to expediting completion of the controversial Mountain Valley Pipeline—the 303-mile long natural gas pipeline between West Virginia and North Carolina. The expedited construction of this pipeline is one of the several reasons Vermont progressive independent senator Bernie Sanders opposed the bill, saying “at a time when climate change is, by far, the most existential threat facing our country and the entire world I cannot, in good conscience, vote for a bill that makes it easier for fossil fuel companies to pollute and destroy the planet by fast-tracking the disastrous Mountain Valley Pipeline.”
📜 The debt ceiling deal moves on to its next test: the US Senate
🤝 Biden has struck a debt ceiling deal with Republicans to avoid a default
🌍 Please, DC, don’t hurt the global economy