Yesterday afternoon, the U.S. Senate held a dramatic vote. After months of setbacks and struggles, President Barack Obama, Congress and White House leaders finally came to an agreement on how the U.S. government should handle its debt crisis. Yesterday, the compromise officially became a law. Currently, the government is spending and borrowing more money than it is bringing in. If it goes too far into debt, the U.S. government would be unable to pay its bills and runs the risk of shutting down. The passing of the new law prevented this from happening. "We have averted an economic crisis," said Senator Dick Durbin of Illinois, the Senate's second-ranked Democrat.
Hitting the Ceiling
The debt crisis occurred because of an imbalance between the amount of money taken in and the amount given out. To maintain a monetary balance, the government creates a budget. A budget is a set amount of money that the government is allowed to spend on various programs, ranging from national park preservation to health care. When the budget runs out, the government borrows money from state and local governments, as well as from private institutions and international governments. This results in debt. Congress places a strict legal limit on the amount of money that can be borrowed each year. This is called a debt ceiling.
In May, the United States hit its debt ceiling of $14.3 trillion. It was crucial for this law to pass so that the government can continue paying down debt. The United States plays a large role in the global economy. Exceeding the debt ceiling would not only hurt our government, it would also affect the rest of the world.
Making a Law
On Sunday night, lawmakers agreed to a deal to increase the debt ceiling by about $2 trillion by making spending cuts over the next ten years. Though the compromise was made, both the Senate and the House of Representatives needed to officially pass the proposal. Early Monday evening, the House passed the debt plan 269 to 161. President Obama's final signing of the law took place yesterday.
Both Democrats and Republicans are expressing various opinions of opposition and support to the debt-ceiling increase. While there are mixed reactions to the deal, there is also relief. At a news conference before the vote, House Speaker John Boehner expressed his confidence in the plan. "The legislation will solve this debt crisis and help get American people back to work," Boehner said.