After months of partisan arm-wrestling, the U.S. Congress approved the bill to raise America's debt ceiling after the Senate's passage late Thursday, the 103rd time since 1945, allowing the government to avert a debt default by borrowing more.
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The Senate approved the bill by a 63-36 vote. Previously okayed by the House of Representatives by a vote of 314 to 117, the act suspends the debt ceiling until January 2025.
The debt ceiling is a cap on the total amount of money that the United States is authorized to borrow to fund the government and meet its financial obligations.
The United States reached in January its debt limit of US$31.4 trillion, more than 120 percent of its annual GDP. For months, as the White House and Congress were locked in a tug-of-war over terms of lifting the debt ceiling, the Treasury Department has been using "extraordinary measures" to avoid default.
The deal was a make-or-break bid to steer the U.S. government away from a perilous debt cliff, as U.S. Treasury Secretary Janet Yellen has warned that the country could run out of money to pay its bills on time if Congress failed to address the debt ceiling by June 5.
With Congress's approval, the bill will be sent to U.S. President Joe Biden's desk for his signature before becoming law.
As with previous debt-ceiling sagas, the passage of the deal represents a trade-off of partisan interests following a months-long game of chicken between Democrats and Republicans, with each side trying to use an imminent default as a bargaining chip for advancing their own political agenda.
Both parties have been selling the deal as a victory for their own side, but not all are pleased with the result.
"It is frankly an insult to the American people to support a piece of legislation that continues to put our country's financial future at risk," U.S. Representative Matt Rosendale, a Republican from the U.S. state of Montana, lamented in a statement.
It's not just Americans who have been on tenterhooks watching the cyclical U.S. partisan game. Over half of the world's foreign currency reserves are held in dollars, which means "a U.S. default could wreak havoc on global financial markets," the U.S. Council on Foreign Relations said in a recent report.
A decrease in the dollar's value triggered by default or the uncertainty surrounding it "could make debts denominated in other currencies relatively more expensive and threaten to tip some emerging economies into debt or political crises," added the think tank.
"The U.S. as the world's biggest economy has taken the global economy hostage by politicizing and polarizing its internal political issues on global financial markets," said Joseph Matthews, a senior professor at the BELTEI International University in Phnom Penh.
Despite periodic rises of the debt ceiling, the two parties show little interest in addressing the root cause of the trouble, including America's behemoth spending appetite.
Military spending accounts for the lion's share of the country's debt portfolio. Since 2000, the United States has poured hundreds of billions of dollars into the battlefields of Afghanistan, Iraq, Syria, Libya, and Ukraine.
According to the Watson Institute at Brown University, from fiscal year 2001 to fiscal year 2022, more than half of the country's extra debt came from war costs.
The splurge on wars is not the only expenditure to break Uncle Sam's bank. According to Jeffrey Sachs, director of the Center for Sustainable Development at Columbia University, immoderate welfare and healthcare costs also contribute to the fiscal woes.
But so far, neither of the parties has been willing to risk offending voters by cutting these gross excesses and nudging the country's budget system back onto a sustainable track.
In its latest report, the U.S. Congressional Budget Office projected that U.S. debt held by the public will reach 193 percent of GDP in 2053 if current policies generally remain unchanged. And by 2028, interest payments of the U.S. government could exceed the country's entire defense budget.
Without concrete measures to reform its fiscal system, the repeated adjustments of the debt ceiling have proven to be nothing but only a Sisyphean task. This time is no exception.
Even though a deal is reached before the deadline, "such risks will keep reoccurring until comprehensive reforms are enacted," said Steven Wright, associate professor of International Relations at the Hamad Bin Khalifa University, Qatar.
"We should never have been put in this position to begin with. This is about paying the ransom to a bunch of hostage takers," Senator Elizabeth Warren said before casting her vote.
"And that is not how we should run this government. It's not good for the people of this country and it's not good for the position of the United States all around the world."