US Senate Passes Debt Ceiling Bill with Overwhelming Bipartisan Support
The US Senate passed the debt ceiling bill with overwhelming bipartisan support yesterday, approving a tax deal between the White House and congressional Republicans. The deadlock over the debt crisis threatened to trigger an unprecedented debt default in the world’s largest economy. The bill now goes to President Joe Biden for his signature, just four days before the US Treasury predicted it would run out of cash to pay all of its bills. Such a scenario would have dealt a traumatic blow to the global economy and financial markets and would have been a huge self-inflicted wound for Washington.
The agreement raises the US debt limit through 2025 and sets limits on government spending for the next two years, placing further restrictions on US fiscal policy until at least after the next presidential election.
US Employment Report Declines, and The World Bank Sees New Leadership
The US is preparing for an economic downturn with the release of the US employment report and the start of Ajay Banga’s term as president of the World Bank. The Bureau of Labor Statistics will release the US employment data, which is expected to show a cooling last month for job growth. Meanwhile, Ajay Banga, former CEO of Mastercard, will begin a five-year term as the president of the World Bank, where he is expected to focus on issues such as climate change and the economic recovery from the pandemic.
Security Forum Runs until Sunday in Singapore
The Shangri-La Dialogue, a security forum, runs until Sunday in Singapore, with US and Chinese defense chiefs expected to speak separately after Beijing has refused a meeting between the two leaders. Amid escalating tensions between the US and China over Taiwan, the forum has become a platform for addressing regional security challenges.
Other Major Stories
Brazil’s Top Foreign Policy Adviser Calls on the West to Address Russian Security Concerns
Nvidia Supporting US Stock Rebound as Rapid AI Development Creates Losers
Australia’s Largest Pension Fund Decides Not to Renew Contracts with PwC
34th Anniversary of the Tiananmen Square Protest
Saudi Arabia Planning Second Lithium Processing Plant
Additional Piece: Implications of the US Debt Ceiling Bill
The bipartisan agreement on the debt ceiling bill has far-reaching implications for the US economy and the global financial markets. First, the US Treasury can now pay its bills on time and avoid a default, which could have triggered a recession. This outcome would have had ripple effects on the global economy, as the US dollar is the world’s reserve currency and a default could have undermined its global position.
Second, the agreement extends the debt limit through 2025, which means that the US government can continue to borrow money to fund its programs and services. This decision will have significant political and economic consequences, as it limits the ability of future administrations to implement their fiscal policies without addressing the debt issue.
Third, the US government has agreed to set limits on government spending for the next two years, which could have implications for specific sectors such as healthcare and defense. While this decision could help to reduce the deficit, it could also limit the government’s ability to address pressing social and economic issues such as infrastructure, education, and climate change.
Overall, the debt ceiling bill is a compromise that reflects the political realities and economic challenges facing the US. It is hoped that the agreement will help to restore confidence in the US government’s fiscal responsibility and commitment to paying its bills on time. As the US and other countries continue to grapple with the economic fallout from the pandemic, a long-term solution to the debt issue will require a comprehensive approach that involves addressing systemic issues such as income inequality, tax reform, and sustainable economic growth.
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THE The US Senate passed the debt ceiling bill with overwhelming bipartisan support yesterday, approving a tax deal between the White House and congressional Republicans to end a weeks-old political deadlock that threatened to trigger an unprecedented debt default in the world’s largest economy.
By a vote of 63 to 36, the bill now goes to President Joe Biden for his signature, just four days before the US Treasury predicted it would run out of cash to pay all of its bills. Such a scenario would have dealt a traumatic blow to the global economy and financial markets and would have been a huge self-inflicted wound for Washington.
“Senators on both sides voted to protect the hard-earned economic progress we’ve made and prevent a first-ever default by the United States,” Biden said in a statement after the vote. “Together, they proved once again that America is a nation that pays its bills and lives up to its obligations — and always will be.”
The agreement raises the US debt limit through 2025 and sets limits on government spending for the next two years, placing further restrictions on US fiscal policy until at least after the next presidential election.
Here’s what else I’ll be watching over the next few days:
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Economic data: The US employment report should prove it job growth cooled last month. The Bureau of Labor Statistics will release the data today at 8:30 a.m. Eastern time.
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World Bank: Former CEO of Mastercard Ajay Banga today begins a five-year term as president.
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Shangri-La dialogue: Security forum runs until Sunday in Singapore, with US and Chinese defense chiefs expected to speak separately after Beijing has refused a meeting between the two leaders.
Five more top stories
1. Exclusive: The West must “heed” Russian President Vladimir Putin’s security concerns and stop the slide towards a Versailles-style victorious peace in Ukraine, said Brazil’s top foreign policy adviser and former foreign minister. Read the full Financial Times interview with Celso Amorim.
2. Nvidia is one of the few companies that will support this year’s rebound in US stocks though rapid advances in artificial intelligence “create more losers than winners,” according to one of the major recent buyers of the chipmaker’s stock. Read more from the remarks of the founder of GQG Partners, Rajiv Jain.
3. Australia’s largest pension fund, AustralianSuper, says it won’t sign any new contracts with PwC. The consultancy has come under intense public scrutiny over the past month after the release of emails showing it had used confidential information on changes in tax laws by the government to win new business.
4. June 4 is the 34th anniversary of the Tiananmen Square protest. Hong Kong was known for hosting the largest Tiananmen commemorative event on Chinese territory. But after Beijing cracked down on pro-democracy protests and introduced a sweeping national security law in 2020, dissent was suppressed.
5. Saudi Arabia is planning a second lithium processing plant as it steps up efforts to work with Western partners to develop its battery supply chain. The plant, which will use raw materials mined in Austria to produce refined lithium hydroxide for BMW, is a sign of how metalworking supply chains are being slowly developing outside of China.
How well did you manage to keep up with the news this week? Take our quiz.
The big read
Joe Biden has sought to step up military coordination with allies in Asia who were already getting tougher on China as tensions over Taiwan escalate © FT Montage/Getty
When Joe Biden took office, there was some concern that he might take a softer approach to China than his predecessor Donald Trump, who has taken a much sharper stance than previous US presidents. But Biden has taken an unexpectedly tough stance, stepping up security initiatives to increase deterrence and better prepare for a potential conflict over Taiwan. Here’s how the US is deepening military alliances in China’s backyard.
We are also reading. . .
Chart of the day
Binance has lost a quarter of its market share in the past three months as a US watchdog prosecutes it for allegedly violating federal laws. It controls 43% of the average monthly volume on global cryptocurrency exchanges, down from 57.5% in February, according to research provider CCData. That’s why the world’s largest cryptocurrency exchange suffered the steep decline.
Take a break from the news
Few artists have probed the illusions of identity like Cindy Sherman, who made a reputation for herself in the 1970s with her “Untitled Film Stills” series featuring photographs of abandoned lovers and actresses consumed by the lost films of Hitchcock or Antonioni. See his most recent work, shared exclusively with the FT.
Cindy Sherman’s new work is on view at Hauser & Wirth Zürich, Limmatstrasse, from 9 June to 16 September © Cindy Sherman, courtesy the artist and Hauser & Wirth
Further contributions by Tee Zhuo and Vita Dadoo Lomeli
https://www.ft.com/content/c3b297c7-749a-41ed-801d-070c9f3be18e
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