After weeks of political deadlock, tense negotiations, and growing anxiety about the future of the economy, the Senate approved bipartisan legislation on Thursday night (1) that temporarily suspends the debt ceiling and imposes new spending caps, thus ending the possibility of a U.S. government default.
The Senate’s approval by a vote of 63 to 36 concluded a political standoff that began to form as soon as Republicans took the majority in the House of Representatives earlier this year, promising to try to cut federal government spending and extract political concessions from President Biden.
On Thursday night, Biden celebrated the bill’s approval and promised to sign it as soon as possible.
“I look forward to signing the bipartisan budget agreement. The agreement protects our historic and hard-fought economic recovery and all the progress that American workers have made over the past two years. And it protects the key priorities and accomplishments of the last two years. Our work is far from over, but this agreement is a reminder of what is possible when we act in the best interest of our country,” said Biden.
The agreement suspends the debt ceiling of $31.4 trillion until January 2025, allowing the government to borrow unlimited amounts to pay its debts and ensuring that another dispute does not occur before the next presidential election. The new rules also set new spending levels.
Other changes include:
• The legislation will rescind about $28 billion in non-mandatory funds from the Covid-19 relief packages that Congress approved in response to the pandemic; but will retain $5 billion in funding to accelerate the development of vaccines and treatments for Covid-19;
• The package will also tighten the current work requirements in the Temporary Assistance for Needy Families program, mainly by adjusting the credits for the work participation rate that states can receive to reduce the number of cases;
• Work requirements will not be introduced in Medicaid;
• Borrowers will have to start repaying their student loans at the end of the summer, as the Biden administration has already announced. The pause has been in effect since the beginning of the Covid-19 pandemic;
• The package also includes new measures in the National Environmental Policy Act aimed at increasing coordination, predictability, and certainty associated with federal agency decision-making;
Source: The New York Times