US House passes the Fiscal Responsibility Act which raises the debt ceiling boosts military spending and caps non military spending
The US House of Representatives approved a bill to raise the debt ceiling on Wednesday, just days before the deadline to avoid a national default.
A total of 149 Republicans and 165 Democrats voted for the legislation, while 71 Republicans and 46 Democrats voted against.
The vote came after Treasury Secretary Janet Yellen warned on Friday that the government could run out of money to pay its bills by June 5. The legislation now requires a vote in the Senate, whose members have until Monday to approve it.
The bill suspends the debt limit through January 1, 2025, and caps non-military spending, among other measures.
The 99-page “Fiscal Responsibility Act of 2023” raises the debt limit for two years and sets discretionary spending limits through 2029. It sets a generous limit of $886 billion for the 2024 defense budget and $895 billion for 2025, while non-military discretionary programs get just $637 billion.
The bill contains relatively few of the spending cuts Republicans had demanded, aside from rescinding $1.4 billion that had been allocated to the Internal Revenue Service in a controversial expansion of that department under the Inflation Reduction Act and reclaiming $28 billion in unspent Covid-19 funding.
President Joe Biden thanked House members shortly after the vote for taking “a critical step forward to prevent a first-ever default and protect our country’s hard-earned and historic economic recovery.” Biden described the deal he struck with House Speaker Kevin McCarthy last Saturday as “a bipartisan compromise,” in which “neither side got everything it wanted.”
The vote followed a protracted fight between Republicans and Democrats over spending priorities. There were also fears that Republicans, who hold a majority in the House, would fail to support the Fiscal Responsibility Act due to opposition within their own ranks. However, McCarthy, a Republican from California, said that by backing the bill, the party had “put the citizens of America first.”
“Passing the Fiscal Responsibility Act is a crucial first step for putting America back on track,” McCarthy told reporters. “It does what is responsible for our children, what is possible in divided government, and what is required by our principles and promises.”
Some Republicans have dismissed the threat of the US defaulting on its debt as “a scare tactic” employed by Biden and the Democrats to ram through their spending policies.
“We are not going to default. We are taking in record revenues,” said Scott Perry, chair of the House Freedom Caucus. He added that there was “no chance” that the government would stop funding crucial social programs. Perry argued that the bill passed on Wednesday would eventually lead to a “complete default of the United States.”
Former President Donald Trump, who is currently running in the 2024 election, also criticized the bill. He told a radio station in Des Moines on Wednesday that he “would’ve taken the default” if he could not secure a desired deal.
Should Congress fail to raise its borrowing limit in time, the US would face its first-ever default. Given the dollar’s status as the global reserve currency and the sheer size of the debt – $31.8 trillion – many believe this would set in motion a global crisis.