Washington, Jun 2, 2023: The US Senate on late thursday passed bipartisan legislation backed by President Joe Biden that lifts the government’s $31.4 trillion debt ceiling, averting what would have been a first-ever default.
The Senate voted 63-36 in favor’s to approve the bill that was passed on Wednesday by the House of Representatives, as lawmakers raced against the clock following months of partisan bickering between Democrats and Republicans.
U.S. Senate Republican Leader Mitch McConnell stated, “Four months after Speaker McCarthy invited President Biden to begin negotiating a resolution to the looming debt crisis, an important step toward fiscal sanity will finally become law.
“Thanks to House Republicans’ efforts, the Fiscal Responsibility Act avoids the catastrophic consequences of default and begins to curb Washington Democrats’ addiction to reckless spending that grows our nation’s debt.
“Tonight, the Senate passed legislation that will reduce federal spending by $1.5 trillion, begin to reform the infrastructure permitting process, finally rescind unspent COVID dollars, and cut spending at the IRS. But our work is far from over, particularly in delivering necessary support to America’s armed forces.
In case US default, an actual breach of the U.S. debt ceiling would likely cause severe damage to the U.S. economy. The economy would quickly shift into reverse, with the depth of the losses a function of how long the breach lasted. A protracted default would likely lead to severe damage to the economy, with job growth swinging from its current pace of robust gains to losses numbering in the millions.
In other words, default on US government’s debt could reverse the historic economic gains that have been achieved since the president took office, an unemployment rate near a 50-year low, the creation of 12.6 million jobs, and robust consumer spending that has consistently powered a solid, reliable growth engine, supported by paychecks from the strong job market and healthy household balance sheets.