<p>In a big win for Speaker Kevin McCarthy, the US House passed legislation on Wednesday by a narrow 217-215 vote that would raise the government's legal debt ceiling (also known as borrowing limit) by $1.5 trillion in exchange for spending restrictions.</p>

<p>Republicans run the House of Representatives, while Democrats have a majority in the Senate. So, the legislation has little chance of passing in the Senate.&nbsp;Also, Biden has threatened to veto it.</p>

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<p>The federal government borrows money to assist cover budgeted expenses including social security and Medicare pa.yments as well as the wages of US government and military employees.</p>

<p>If passed, the legislation would reduce total government expenditure in return for an increase in the debt ceiling of $1.5 trillion through 2024. A few of the potential federal spending cuts could include, clawing back unspent Covid-19 funds, stricter work requirements for recipients of food stamps and other government assistance, a halt to Biden's plans to forgive up to $20,000 in student loans, and the termination of many significant renewable energy tax breaks.</p>

<p>The White House believes that the debt ceiling must be raised unconditionally.&nbsp;“We’ve done our job,” McCarthy said.&nbsp;“The president can no longer ignore” federal spending restrictions, he said adding, “Now he should sit down and negotiate.”</p>

<p>Meanwhile, Biden said, “Happy to meet with McCarthy, but not on whether or not the debt limit gets extended." “That’s not negotiable.”</p>

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<p>The president and Congress are attempting to reach an agreement that would allow the nation's debt, which is currently $31 trillion, to be lifted in order to allow for additional borrowing and prevent a fiscal crisis.</p>

<p>The passage of the expansive 320-page package in the House is only the beginning of what is anticipated to become a week-long political slog.</p>

<p>The House Republican majority wants to&nbsp;restrict future expenditure rises at 1% over the next ten years, among other reforms.&nbsp;Democrats mocked the Republican proposal, calling it a "shakedown," "ransom note," and "an unserious bill" that would put the country in peril financially.</p>

<p>Although "extraordinary measures" are being taken by the treasury department to pay the bills, funds are anticipated to run out this summer. As per experts, the economy is under serious debt default risk, reported Guardian.</p>

<p><strong>Watch | Gemini Sankaran, pioneer of Indian Circus dies at age of 99 in Kerala's Kannur</strong></p>

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<p>If the Republican proposal were to become law, it would cut the federal deficit by $4.8 trillion over the next ten years. Chuck Schumer, the leader of the Senate majority, stated that House approval of the plan would be a "wasted effort" and that McCarthy should join Democrats at the negotiating table.&nbsp;</p>

<p>Senate Republican leader Mitch McConnell said both Biden and McCarthy must come reach a consensus else “we’ll be at a standoff. And we shouldn’t do that to the country.”</p>

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In a big win for Speaker Kevin McCarthy, the US House passed legislation on Wednesday by a narrow 217-215 vote that would raise the government's legal debt ceiling (also known as borrowing limit) by $1.

In a big win for Speaker Kevin McCarthy, the US House passed legislation on Wednesday by a narrow 217-215 vote that would raise the government's legal debt ceiling (also known as borrowing limit) by $1.5 trillion in exchange for spending restrictions. Republicans run the House of Representatives, while Democrats have a majority in the Senate. So, the legislation has little chance of passing in the Senate. Also, Biden has threatened to veto it. Also Read | Argentina moves away from US dollar for trade in Chinese currency The federal government borrows money to assist cover budgeted expenses including social security and Medicare pa.yments as well as the wages of US government and military employees. If passed, the legislation would reduce total government expenditure in return for an increase in the debt ceiling of $1.5 trillion through 2024. A few of the potential federal spending cuts could include, clawing back unspent Covid-19 funds, stricter work requirements for recipients of food stamps and other government assistance, a halt to Biden's plans to forgive up to $20,000 in student loans, and the termination of many significant renewable energy tax breaks. The White House believes that the debt ceiling must be raised unconditionally. “We’ve done our job,” McCarthy said. “The president can no longer ignore” federal spending restrictions, he said adding, “Now he should sit down and negotiate.” Meanwhile, Biden said, “Happy to meet with McCarthy, but not on whether or not the debt limit gets extended." “That’s not negotiable.” Also Read | Singapore doubles stamp duty for foreigners buying home The president and Congress are attempting to reach an agreement that would allow the nation's debt, which is currently $31 trillion, to be lifted in order to allow for additional borrowing and prevent a fiscal crisis. The passage of the expansive 320-page package in the House is only the beginning of what is anticipated to become a week-long political slog. The House Republican majority wants to restrict future expenditure rises at 1% over the next ten years, among other reforms. Democrats mocked the Republican proposal, calling it a "shakedown," "ransom note," and "an unserious bill" that would put the country in peril financially. Although "extraordinary measures" are being taken by the treasury department to pay the bills, funds are anticipated to run out this summer. As per experts, the economy is under serious debt default risk, reported Guardian. Watch | Gemini Sankaran, pioneer of Indian Circus dies at age of 99 in Kerala's Kannur × If the Republican proposal were to become law, it would cut the federal deficit by $4.8 trillion over the next ten years. Chuck Schumer, the leader of the Senate majority, stated that House approval of the plan would be a "wasted effort" and that McCarthy should join Democrats at the negotiating table. Senate Republican leader Mitch McConnell said both Biden and McCarthy must come reach a consensus else “we’ll be at a standoff. And we shouldn’t do that to the country.” WATCH WION LIVE HERE You can now write for wionews.com and be a part of the community. Share your stories and opinions with us here.

In big win for Speaker McCarthy, US House passes debt ceiling bill

<p>The US has hit its borrowing limit, also known as the debt ceiling, fueling fears of putting global markets in instability and setting off a budgetary battle in Congress. The looming debt ceiling crisis unsettles investors, as any default will have a major impact on the international financial markets.</p>

<p>So, what exactly is the debt ceiling, or borrowing cap, and why is it such a big deal?</p>

<h2><strong>What is a debt ceiling?</strong></h2>

<p>The debt ceiling determines how much money the US government can borrow for its expenses. After the borrowing cap is reached, the Treasury Department is not permitted to raise money for the government by issuing further bills, bonds, or notes. In this situation, the only source of funding for the country is tax revenues. Currently, the cap on the US government borrowing equates to around 120 per cent of the nation's yearly economic output.</p>

<h2><strong>Where is the borrowed money used?</strong></h2>

<p>US Congress determines the borrowing limit presently set at $31.4 trillion. The Federal government uses borrowed money to help pay for costs included in its budgets, such as social security and Medicare payouts and the salaries of US military and government workers.</p>

<h2><strong>How long can the US government survive?</strong></h2>

<p>Janet Yellen, the US Treasury Secretary, stated last week that the government could only pay its payments through early June if the debt ceiling is not increased. Yellen said that "extraordinary measures" are now being used to stop the United States from going into default on its financial expenses. However, Yellen's estimate for the "drop-dead date" is earlier than some experts had predicted for the US to exhaust its borrowing limit.</p>

<p>Indeed, many experts believe the US could reach its debt ceiling in the third or fourth quarter. According to Jonathan Cohn, Head of Rates Trading Strategy at Credit Suisse in New York, the debt ceiling may be hit between September and early November. Goldman Sachs expects the US government to run out of money anytime between August and October.</p>

<h2><strong>Can the US then raise the debt ceiling?</strong></h2>

<p>The borrowing cap has to be raised, so the US government continues to make its payments due and prevent a default. The political situation, though, is not favourable. Republicans run the House of Representatives, while Democrats have a majority in the Senate. Congress is reluctant to raise the debt ceiling because it might provide Republicans with leverage when negotiating spending cuts.</p>

<h2><strong>Democrats vs Republicans:</strong></h2>

<p>In a conversation with Fox News, newly appointed US House Speaker Kevin McCarthy said one could not just keep increasing the debt ceiling. "Let's sit down and change our behaviour for the good of America. Because what we're going to do is bankrupt this country and these entitlements if we don't change their behaviour today." On the contrary, White House press secretary, Karine Jean-Pierre, said the administration would not be negotiating. If the debt ceiling is to be raised, it should be done without any conditions.</p>

<h2><strong>What if the debt ceiling is not raised?</strong></h2>

<p>If the US government cannot borrow more money, it will put existing Federal programs at risk. Investors will get jittery if the verbal battle is not resolved and no further action is taken to address the situation. The US dollar may also lose its global appeal if the Federal government defaults on its loan and interest payments. That, in turn, would weaken the greenback, hurt US financial markets and weigh on the economy, including job losses and activity gloom.</p>

<h2><strong>2011 political deadlock over the debt ceiling:</strong></h2>

<p>The United States was on the verge of default in 2011 due to political deadlock in Washington over the debt ceiling. That crashed US stocks and cost the nation its top-tier AAA credit rating from Standard &amp; Poor. According to a research report from Goldman Sachs, the S&amp;P 500 plummeted 15 per cent during the 2011 crisis, while the stock of those firms with the highest sales exposure to US federal spending fell by a quarter.</p>

<p>&nbsp;</p>


The US has hit its borrowing limit, also known as the debt ceiling, fueling fears of putting global markets in instability and setting off a budgetary battle in Congress.

The US has hit its borrowing limit, also known as the debt ceiling, fueling fears of putting global markets in instability and setting off a budgetary battle in Congress. The looming debt ceiling crisis unsettles investors, as any default will have a major impact on the international financial markets. So, what exactly is the debt ceiling, or borrowing cap, and why is it such a big deal? What is a debt ceiling? The debt ceiling determines how much money the US government can borrow for its expenses. After the borrowing cap is reached, the Treasury Department is not permitted to raise money for the government by issuing further bills, bonds, or notes. In this situation, the only source of funding for the country is tax revenues. Currently, the cap on the US government borrowing equates to around 120 per cent of the nation's yearly economic output. Where is the borrowed money used? US Congress determines the borrowing limit presently set at $31.4 trillion. The Federal government uses borrowed money to help pay for costs included in its budgets, such as social security and Medicare payouts and the salaries of US military and government workers. How long can the US government survive? Janet Yellen, the US Treasury Secretary, stated last week that the government could only pay its payments through early June if the debt ceiling is not increased. Yellen said that "extraordinary measures" are now being used to stop the United States from going into default on its financial expenses. However, Yellen's estimate for the "drop-dead date" is earlier than some experts had predicted for the US to exhaust its borrowing limit. Indeed, many experts believe the US could reach its debt ceiling in the third or fourth quarter. According to Jonathan Cohn, Head of Rates Trading Strategy at Credit Suisse in New York, the debt ceiling may be hit between September and early November. Goldman Sachs expects the US government to run out of money anytime between August and October. Can the US then raise the debt ceiling? The borrowing cap has to be raised, so the US government continues to make its payments due and prevent a default. The political situation, though, is not favourable. Republicans run the House of Representatives, while Democrats have a majority in the Senate. Congress is reluctant to raise the debt ceiling because it might provide Republicans with leverage when negotiating spending cuts. Democrats vs Republicans: In a conversation with Fox News, newly appointed US House Speaker Kevin McCarthy said one could not just keep increasing the debt ceiling. "Let's sit down and change our behaviour for the good of America. Because what we're going to do is bankrupt this country and these entitlements if we don't change their behaviour today." On the contrary, White House press secretary, Karine Jean-Pierre, said the administration would not be negotiating. If the debt ceiling is to be raised, it should be done without any conditions. What if the debt ceiling is not raised? If the US government cannot borrow more money, it will put existing Federal programs at risk. Investors will get jittery if the verbal battle is not resolved and no further action is taken to address the situation. The US dollar may also lose its global appeal if the Federal government defaults on its loan and interest payments. That, in turn, would weaken the greenback, hurt US financial markets and weigh on the economy, including job losses and activity gloom. 2011 political deadlock over the debt ceiling: The United States was on the verge of default in 2011 due to political deadlock in Washington over the debt ceiling. That crashed US stocks and cost the nation its top-tier AAA credit rating from Standard & Poor. According to a research report from Goldman Sachs, the S&P 500 plummeted 15 per cent during the 2011 crisis, while the stock of those firms with the highest sales exposure to US federal spending fell by a quarter.

EXPLAINED: What's US debt ceiling & why is it such a big deal?

<p>Leaders of the Republican Party in US Congress on Tuesday continued withholding support to increasing US debt ceiling. The efforts to raise the debt ceiling have been initiated by the Democratic Party.</p>

<p>Last week, Treasury Secretary Janet Yellen warned that the government will run out of money next month unless lawmakers take action. Banking groups have urged Congress to act to prevent "irreparable harm" to US economy.</p>

<p>Republican Senate Minority Leader Mitch McConnell said Democrats will have to resolve the issue on their own.</p>

<p>"The Democratic leaders have every tool and procedure they need to handle the debt limit on a partisan basis, just like they are choosing to handle everything else," McConnell said on the Senate floor.</p>

<p>Congress is currently considering a $1.2 trillion infrastructure plan that has the backing of Democrats and some Republicans.&nbsp;</p>

<p>Also on their agenda is a massive social spending plan costing $3.5 trillion over 10 years, which has only garnered the support of Democrats who plan to pay for it with tax increases on corporations and the wealthiest Americans.</p>

<p>McConnell objects to what he called a "massive reckless tax and spending spree."&nbsp;</p>

<p>Amazon CEO Andy Jassy called for raising the debt ceiling in an interview with CNBC.&nbsp;</p>

<p>"I think it's scary for consumer confidence and for confidence in US businesses and potential credit ratings if we don't make sure that we raise that debt ceiling," Jassy said.</p>

<p>The Securities Industry and Financial Markets Association (SIFMA), American Bankers Association and other industry groups said in a letter to congressional leaders that defaulting "on our existing obligations would be irresponsible and do irreparable harm to the US economy and taxpayers."</p>

<p>Even "a short-term delay would cause serious harm at a time when our economy continues to recover from the impact of the Covid-19 pandemic," the letter read.</p>

<p>USA's debt and deficit have increased during Covid-19 pandemic.</p>

<p><em>(With inputs from agencies)</em></p>


Leaders of the Republican Party in US Congress on Tuesday continued withholding support to increasing US debt ceiling. The efforts to raise the debt ceiling have been initiated by the Democratic Party.

Leaders of the Republican Party in US Congress on Tuesday continued withholding support to increasing US debt ceiling. The efforts to raise the debt ceiling have been initiated by the Democratic Party. Last week, Treasury Secretary Janet Yellen warned that the government will run out of money next month unless lawmakers take action. Banking groups have urged Congress to act to prevent "irreparable harm" to US economy. Republican Senate Minority Leader Mitch McConnell said Democrats will have to resolve the issue on their own. "The Democratic leaders have every tool and procedure they need to handle the debt limit on a partisan basis, just like they are choosing to handle everything else," McConnell said on the Senate floor. Congress is currently considering a $1.2 trillion infrastructure plan that has the backing of Democrats and some Republicans. Also on their agenda is a massive social spending plan costing $3.5 trillion over 10 years, which has only garnered the support of Democrats who plan to pay for it with tax increases on corporations and the wealthiest Americans. McConnell objects to what he called a "massive reckless tax and spending spree." Amazon CEO Andy Jassy called for raising the debt ceiling in an interview with CNBC. "I think it's scary for consumer confidence and for confidence in US businesses and potential credit ratings if we don't make sure that we raise that debt ceiling," Jassy said. The Securities Industry and Financial Markets Association (SIFMA), American Bankers Association and other industry groups said in a letter to congressional leaders that defaulting "on our existing obligations would be irresponsible and do irreparable harm to the US economy and taxpayers." Even "a short-term delay would cause serious harm at a time when our economy continues to recover from the impact of the Covid-19 pandemic," the letter read. USA's debt and deficit have increased during Covid-19 pandemic. (With inputs from agencies)

Republicans continue withholding support to US debt ceiling increase