House of Representatives Approves Deal to Avert US Default

The House of Representatives has approved a deal to prevent a default by allowing the country to borrow more money. The bill received a comfortable majority of votes, although some members from both major political parties defected. Before it becomes law, President Joe Biden needs to sign it after a Senate vote later this week.

Failing to raise the debt ceiling would bar the government from borrowing additional funds or meeting its financial obligations. Such a default would have widespread consequences, potentially causing havoc in the global economy and impacting prices and mortgage rates in other countries. The bipartisan bill, spanning 99 pages, gained support from 165 Democrats and 149 Republicans in the House, meeting the necessary simple majority.

Although the bill’s approval in the House is a significant milestone, it still faces potential obstacles in the Senate. Critics from both sides have voiced their objections. Despite these challenges, Senate leaders from both parties are working to ensure the bill’s passage and its arrival on President Biden’s desk for his signature before the impending deadline for default.

The uncertainty surrounding the debt crisis has already impacted the stock market, with US stock indices ending the day slightly lower. The Dow Jones Industrial Average closed down 0.4%, while the S&P 500 and Nasdaq Composite both experienced a 0.6% dip. The market reaction reflects the concern and caution among investors as they closely monitor the developments in Congress and await a resolution to the debt ceiling issue. In 2011, the last time the US faced a similar debt ceiling crisis, the country’s credit rating was downgraded by Standard Poor’s, a downgrade that has yet to be reversed. The stakes are high, and with the Senate vote pending, all eyes are now on lawmakers to find a resolution and avert a potentially catastrophic default scenario.