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2023 United States debt-ceiling crisis

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On January 19, 2023, the United States hit its debt ceiling. This started a crisis, as part of a debate within Congress about how the government should spend money and how it should deal with the national debt.[1][2] Because of this, Janet Yellen, the Secretary of the Treasury, started using "extraordinary measures" until the crisis was over. On May 1, 2023, Yellen gave a warning that these measures could stop working by June 1, 2023.[3][4] This date was later changed to June 5.[5]

The debt ceiling had been increased a few times until December 2021, each time without any requirements.[6][7] This was after a debt-ceiling crisis in 2013. When the 2023 crisis started, members of the Republican Party thought that the debt ceiling should only be increased with a requirement that the government only spends as much money as it did in 2022. Members of the Democratic Party wanted to pass a "clean bill" to increase the debt ceiling without any requirements, which had happened 3 times while Donald Trump was President.[8]

If the government had run out of money, the United States Treasury would have had to either default on its debt or decrease payment of money owed to companies and people that had been mandated but not given enough money by Congress. Many people thought that either situation would make the economy crash.[9] If the government had not been able to give new debt, it would have had to decrease the amount of money it could have spent by an amount equal to about 5% of the size of the American economy.[10] Laurence Tribe [en], a scholar who studies the United States constitution, said that defaulting would not be allowed because of the 14th Amendment and the government would have to pay its debt back even after hitting the debt ceiling.[11][12] President Joe Biden said that he was thinking about using the 14th amendment because he thought he had the authority to, but did not know whether it could be used in time to stop the default, since it might be appealed.[13]

On May 27, Biden and Kevin McCarthy, the Speaker of the House at the time, made a deal to increase the debt ceiling but limit government spending.[14] The deal became a bill, the Fiscal Responsibility Act of 2023, which passed the House on May 31 and the Senate on June 1.[15] Biden signed it into law on June 3, ending the crisis.[16]

Agreement

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President Biden signing the Fiscal Responsibility Act into law on June 3, 2023

The Fiscal Responsibility Act of 2023 is an act of the 118th United States Congress that stopped the debt ceiling until January 2025. It ended the crisis.[17] This law was supported by leaders of both the Republican Party and the Democratic Party.

Patrick McHenry introduced it on May 29, 2023 based on an agreement between Biden and McCarthy. The House approved it on May 31, and the Senate on June 1. Biden signed it into law on June 3.[18]

References

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  1. ↑ "What's the Debt Ceiling, and Will the US Raise It?". Bloomberg.com. January 13, 2023. Retrieved January 22, 2023.
  2. ↑ "US hits debt ceiling, prompting Treasury to take extraordinary measures". NBC Palm Springs. January 19, 2023. Archived from the original on January 22, 2023. Retrieved January 22, 2023.
  3. ↑ "The U.S. Could hit the debt ceiling by June 1, much sooner than expected, Yellen warns". CNBC. May 2023. Archived from the original on May 1, 2023. Retrieved May 1, 2023.
  4. ↑ "US may default on debt as soon as June 1, Yellen reaffirms". CNN. May 15, 2023. Archived from the original on May 17, 2023. Retrieved May 17, 2023.
  5. ↑ Rappeport, Alan (May 26, 2023). "Yellen Expects U.S. to Run Out of Cash by June 5 as Debt Talks Continue". The New York Times. Archived from the original on May 26, 2023. Retrieved May 26, 2023.
  6. ↑ "The Debt Limit Through the Years | Bipartisan Policy Center". bipartisanpolicy.org. Archived from the original on January 27, 2023. Retrieved January 26, 2023.
  7. ↑ Croce, Brian (January 18, 2023). "Debt ceiling debate explained amid global economic uncertainty". Pensions & Investments [en]. Archived from the original on January 18, 2023. Retrieved January 19, 2023.
  8. ↑ Jayshi, Damakant (May 3, 2023). "Did GOP Vote To Raise Debt Ceiling 3 Times with No Preconditions During Trump Era?". Snopes. Archived from the original on May 6, 2023. Retrieved May 6, 2023.
  9. ↑ "Debt ceiling: America's budget crisis of its own creation". BBC News. January 20, 2023. Archived from the original on January 20, 2023. Retrieved January 20, 2023.
  10. ↑ "US Treasury buys time for Biden and GOP on debt limit deal". Associated Press. January 19, 2023. Archived from the original on January 22, 2023. Retrieved January 22, 2023.
  11. ↑ Writer, Christina Pazzanese Harvard Staff (May 15, 2023). "Laurence Tribe explains how 14th Amendment can help Biden avoid default". Harvard Gazette. Archived from the original on May 31, 2023. Retrieved May 31, 2023.
  12. ↑ Swan, Betsy Woodruff (May 14, 2023). "How the Supreme Court might view the debt limit fight". POLITICO. Archived from the original on May 31, 2023. Retrieved May 31, 2023.
  13. ↑ House, The White (May 21, 2023). "Remarks by President Biden in a Press Conference". The White House. Archived from the original on May 31, 2023. Retrieved May 31, 2023.
  14. ↑ Tankersley, Jim; Edmondson, Catie; Broadwater, Luke (May 27, 2023). "White House and G.O.P. Strike Debt Limit Deal to Avert Default". The New York Times. Archived from the original on May 28, 2023. Retrieved May 27, 2023.
  15. ↑ Yilek, Caitlyn (June 1, 2023). "Senate passes debt ceiling bill, sending measure to Biden to avert default". CBS News. Archived from the original on June 2, 2023. Retrieved June 1, 2023.
  16. ↑ "Biden signs debt ceiling bill that pulls US back from brink of unprecedented default". Associated Press. June 3, 2023. Archived from the original on June 3, 2023. Retrieved June 3, 2023.
  17. ↑ Foran, Clare; Robertson, Nicky; Wilson, Kristin (June 1, 2023). "Senate passes debt limit deal to avert default". CNN. Archived from the original on June 1, 2023. Retrieved June 1, 2023.
  18. ↑ Gregorian, Dareh (June 3, 2023). "Biden signs bipartisan debt ceiling bill to avert government default". NBC News. Archived from the original on June 3, 2023. Retrieved June 3, 2023.
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