The US Congress has passed a bill to raise the federal debt limit, hours before today’s deadline (Thursday).
If Republicans and Democrats had not agreed to raise the $16.7 trillion limit on US national debt, many feared the country’s default could have triggered global financial turmoil.
But this is only a temporary solution.
The bill only raises the debt limit until 7 February 2014.
That gives the US Congress less than four months to find a permanent solution to handle its near-$17 trillion national debt – a figure that exceeds its GDP.
There are talks planned for mid-December to try to find a longer-term solution to the debt crisis.
The deal also only funds the US government until 15 January 2014. Until then, though, there is enough cash in the bank to fund federal workers’ and agencies’ return to work.
The partial shutdown of the US government during the debt crisis has seen 350,000 federal workers put on unpaid leave for the last three weeks.
The shutdown is estimated to have cost the US economy some $24bn already.
Ratings firms Standard & Poor’s and Fitch both warned that they were considering downgrading the US’s AAA rating yesterday.
Barack Obama said after the deal was reached that US lawmakers must “earn back the trust of the American people”.
“We’ve got to get out of the habit of governing by crisis,” he said last night, speaking after the Senate vote.
“My hope and expectation is everybody has learned there’s no reason why we can’t work on the issues at hand, why we can’t disagree between the parties without still being agreeable and make sure that we’re not inflicting harm on the American people when we do have disagreements.”
Senator John McCain called the debt crisis “one of the more shameful chapters I have seen in the years I have spent here in the Senate”.
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