US Congress raises debt ceiling & cuts Government spending after Treasury Secretary Warns of economic catastrophe

The US Congress Republicans led by Kevin McCarthy passed a bill to raise the debt ceiling & limit Government Spending Hours after Treasury Secretary Janet Yellen warned that the United States could default on its debt. President Joe Biden and Democrats in the Senate will not pass the bill
The Republican Majority House of Representatives has voted to cut Government spending. The Biden Administration is not please. Pic Credit: mbell1975

Key Takeaways
. Treasury Secretary Janet Yellen warned that the United States could default on its debt
. The US House of Representatives have voted to increase the US Debt ceiling by $1.5 trillion
. The Republicans have are also imposing heavy spending cuts to balance the budget
. US President Joe Biden has announced he will veto the bill

YEREVAN (CoinChapter.com) — Hours after Treasury Secretary Janet Yellen warned that the United States could default on its debt, the US Congress narrowly passed a bill to raise the debt ceiling. According to reports, the Republican-led House of Representatives granted the Biden Administration a much-needed lifeline to prevent an economic collapse. However, the bill also imposed a 14% cut on government spending, a measure that has met the strong disapproval of President Joe Biden and his Democratic party colleagues. 

Kevin McCarthy, the Speaker of the House of Representatives, announced that they have voted to raise the government’s $31.4 trillion debt ceiling by an additional $1.5 trillion. It passed with a narrow 217 votes for and 215 against. Four Republicans broke ranks with the party and voted against the bill. 

House Speaker Kevin McCarthy announced that his party has increased the Debt Ceiling in the US
House Speaker Kevin McCarthy announced that his party has increased the Debt Ceiling in the US after Treasury Secretary Janet Yellen warned of a possible default

Last week, when McCarthy and his team announced their debt ceiling increase plan, Biden slammed it. The 80-year-old career politician claimed that the bill was about “cutting benefits for folks that they don’t seem to care much about.”

For the Republicans, however, the bill serves as another measure to force US President Joe Biden to come to the negotiating table to discuss spending cuts. However, the Democrats, who had demanded an unconditional increase in the debt ceiling, are in no mood to negotiate. 

“I will meet with McCarthy, but not on whether or not the debt limit gets extended.That’s not negotiable,” 

Biden told reporters

Also Read: It is official! US President Joe Biden and VP Kamala Harris are running for reelection

Senate rejects bill- Joe Biden says will veto debt ceiling bill 

After the House of Representatives passed the bill, it was sent to the US Senate for its approval. However, it is almost guaranteed not to pass in the Senate. Moreover, even if it does somehow get the upper house’s approval, President Joe Biden will veto it. 

The spending cuts will allegedly impact several beneficiaries of government plans, including Medicare and Medicaid. 

“President Biden will never force middle class and working families to bear the burden of tax cuts for the wealthiest, as this bill does. The President has made clear this bill has no chance of becoming law,” 

White House Press Secretary Karine Jean-Pierre said. 

Several Democrats have also slammed McCarthy and his team for trying to strip ordinary people of much-needed benefits. 

Representative Frank Pallone from New Jersey’s 6th congressional district called Speaker McCarthy’s Default on America Act “dangerous”.

Representative Frank Pallone slammed the Republicans for their Default bill which warrants massive cuts in Government spending

Meanwhile, McCarthy announced that Republicans will not recall the bill come what may, and put the onus on the Senate to pass it. 

“We lifted the debt limit; we’ve sent it to the Senate; we’ve done our job,” 

he declared following the vote. 

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Could the US Head for a default?

The Republicans and the Democrats must find a way to either increase the debt ceiling or abolish it completely. Failure to do so would result in the United States facing the first intentional default in its history. 

With both sides adamant to stick to their guns, millions of Americans are waiting for some clarity about the country’s economic prospects. 

“House Republicans have a plan. The Senate does not. And the President is ignoring the debt crisis. President Biden has a choice. Come to the table and stop playing partisan political games, or cover his ears, refuse to negotiate and risk bumbling his way into the first default in our nation’s history,” 

McCarthy said. 
The US Congress Republicans led by Kevin McCarthy passed a bill to raise the debt ceiling & limit Government Spending Hours after Treasury Secretary Janet Yellen warned that the United States could default on its debt. President Joe Biden and Democrats in the Senate will not pass the bill
Republicans want to limit the Biden Administrations spending in exchange for increasing the debt ceiling

However, according to Treasury Secretary Janet Yellen, a default at this point would be disastrous. The “economic catastrophe” that would follow could result in higher interest rates for the years to come.

Moreover, it would cause unemployment, massive layoffs and would force Americans to rely more on loans and credit cards to survive. 

“A default on our debt would produce an economic and financial catastrophe. A default would raise the cost of borrowing into perpetuity. Future investments would become substantially more costly,” 

she told Sacramento Metropolitan Chamber of Commerce members.

Joe Biden has announced he will run again for President next year. With the economic crisis mounting, he is caught between a rock and a hard place. Should he risk a default, or anger his voters by cutting their benefits? He will have to either choose between the two or sit with McCarthy to negotiate. Time will show which one he opts for. 

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