US Debt Ceiling Agreement in Principle Averts Financial Crisis
(29 May 2023 – United States) President Biden and House Republicans have arrived at a tentative deal to address the United States (US) impending 5 June debt ceiling deadline to avoid default on US sovereign debt and catastrophic financial markets turbulence.
The announcements commence intense lobbying by GOP House and Democrat Senate leaders to convince members to vote for the package that must win enough votes to raise the US debt ceiling within the next month.
The US was placed on review for a downgrade by credit rating agency DBRS Morningstar over Washington's debt ceiling stalemate following a similar warning from Fitch.
“The agency was scheduled to make an estimated US$130 billion of payments and transfers during the first two days of June. This would leave Treasury with an extremely low level of resources. The week of 5 June, Treasury will owe an estimated US$92 billion of payments and transfers” Treasury Secretary Janet Yellen wrote in a public letter to House Speaker Kevin McCarthy.
“The deal has historic reductions in spending, consequential reforms that will lift people out of poverty and into the workforce, and rein in government overreach. There are no new taxes and no new government programs” House Speaker Kevin McCarthy said.
“The deal is an important step forward that reduces spending while protecting critical programs for working people and growing the economy for everyone. Th agreement represents a compromise, which means not everyone gets what they want” commented President Biden.