USA: Joe Biden signs law that increases debt limit – 03/06/2023 – Market

The President of the United States, Joe Biden, sanctioned this Saturday (3) the law that suspends the ceiling of US$ 31.4 trillion (R$ 155.5 trillion) for the US government debt, avoiding what would have been the first default in the country’s history.

The House of Representatives and Senate passed the legislation this week after Biden and House Speaker Kevin McCarthy reached an agreement after tense negotiations.

The Treasury Department warned that it would not be able to pay all its bills by June 5 if Congress did not act by that date.

The project approved this week eliminates the debt ceiling of US$ 31.4 trillion (R$ 156.8 trillion) for two years, giving the president, Joe Biden, a breather, not having to negotiate it again next year, in amid the campaign for re-election.

It also keeps non-military spending at the same level for fiscal year 2024 (which runs from October this year to September next) and caps spending increases to 1% in fiscal year 2025, regardless of inflation in the period. Military spending, on the other hand, could grow above that limit in the next two years.

The lack of a solution in recent weeks has spooked financial markets, forcing the United States to pay record interest rates on some bond sales. A possible default would drop US stock markets by up to 45%, according to the White House, and could trigger an immediate recession.