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“The American people can breathe: there will be no default.” The phrase was pronounced this Tuesday night by the leader of the Democratic majority in the Senate, Chuck Schumer, when communicating that a bill had been approved that will increase the debt limit by 2.5 trillion dollars and prevent the first world power runs out of funds, which would have had very serious consequences for the US economy itself, but also for the world economy.
The debt ceiling is the amount of debt beyond which the country can no longer issue new loans to finance itself, preventing it from meeting its payments. Unless Congress, the only authority empowered to do so, increased or suspended the limit, the country eventually could not have met its financial obligations. The debt of the United States reached almost 29 trillion at the beginning of December, according to the Department of the Treasury, whose secretary, Janet Yellen, had warned of the serious consequences of not complying with the payments as of this Wednesday, December 15.
The fierce negotiation on the debt ceiling has dragged on for months and, if finally approved, the Democrats would score a great victory by having managed to avoid such a thorny issue in the face of the legislative elections of 2022. In October the abyss was postponed for two months after the offer made by the Republican minority leader, Senator Mitch McConnell, although it was clear that it was only a momentary patch.
The United States has never had to declare the suspension of payments on its national debt, but it came very close to doing so in 2011, when the mere possibility of that happening unleashed chaos in the financial markets and caused Standard & Poor’s to downgrade the note from solvency of the country.
The bill now heads to the House of Representatives, where its journey will be triumphant due to the majority that Democrats have in that legislative body, and will then be signed by President Joe Biden, having arrived in extremis to the deadline of December 15. The thriller The debt ceiling has maintained its suspense until the last moment, since it has even dodged the 60 votes necessary to approve a measure of that caliber. Last week, Schumer and McConnell reached an agreement to specifically suspend that detail and be able to pass the measure with a simple majority of 50 votes, which Democrats have in the Senate.
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