Temporary relief: US debt limit suspended until 2025

The United States government has been spending more than it earns for many years, leading to an increasing deficit year after year. It is similar to an individual who uses a credit card for purchases and does not pay off the entire balance every month. As a result, the debt accumulates and doubles over time.

This is the situation the US government has found itself in, with spending exceeding its revenues, resulting in a deficit of $31.4 trillion by the end of May.

However, the United States is in a different position from other countries because it owns and prints the dollar, the global reserve currency. This allows it to bear debt at a cheaper cost compared to other nations.

The United States came close to defaulting on its debt for the first time in its history, which would have threatened the US economy with recession and caused turmoil in the markets.

On Friday, the US Congress, after arduous negotiations, approved raising the debt ceiling. The vote resulted in a majority of 63 votes in favor and 36 against the draft law, which the House of Representatives previously passed on Wednesday after months of partisan disputes between Democrats and Republicans.

Nonetheless, this agreement resulted from intense negotiations between President Biden and the Republican camp that lasted for weeks.

In his initial comment, Biden stated that the House of Representatives took a crucial step forward to prevent the United States from defaulting on its debt for the first time in history, emphasizing that the only way to move forward is through a settlement between the Democratic and Republican parties.

The US Treasury Department had warned that it would not be able to meet all of its payments on June 5 if Congress failed to act by that time.

Nearly ten amendments were rejected by members of the Senate before the final vote to send the bill to Biden for signing before the deadline on Monday. According to this legislation, the allowed loan limit will be suspended until January 1, 2025.