In the dispute over the US debt limit, according to a media report, an agreement appears to be imminent. Democrat and Republican negotiators have begun drafting legislation reported the New York Times citing unnamed sources. However, some details are still open. According to the newspaper, the debt ceiling is to be raised for two years. Expenditure for all areas except military and veterans should therefore be limited during this period.
For weeks, Democrats and Republicans have been arguing in tough rounds of negotiations about raising the debt limit. This is the maximum amount the US government can borrow – currently $31.4 trillion. Democratic President Joe Biden has now emphasized that progress is being made. Republican Speaker of the House Kevin McCarthy said it wasn’t easy – but a solution was being worked on.
The Republicans want to force the Democrats to make savings in return for an increase, for example in the social sector. The Democrats, on the other hand, argue that the money will not finance new spending – it will serve to meet commitments already made.
In the United States, Parliament decides the maximum amount of money the state can borrow. According to forecasts by the Ministry of Finance, an unprecedented government default is imminent from the beginning of June. If it really came to that, it could result in a global financial and economic crisis. In the US alone, it is feared that millions of people could lose their jobs.