President Joe Biden signed the nine-week interim finance bill on Thursday.
The law was passed in both houses of Congress and kept the financial position of government departments and institutions unchanged until December 3. If it is not approved, some sections of the government will begin to suspend operations.
However, the move does not include the provision demanded by Democrats to suspend the country’s credit limit after Republicans blocked a version of the bill that included that lending in the Senate. Secretary of the Treasury Janet Yellen has said that if lawmakers do not raise the debt ceiling by Oct. 18, the U.S. economy could be in serious danger and the government unable to pay its bills.
The bill was passed in both houses after Democrats abandoned an earlier attempt to incorporate a debt ceiling suspension into the bill in the face of relentless Republican opposition to the move.
By law, the federal government is open until December 3. The plan includes $ 28.6 billion for states recovering from hurricanes and wildfires, and $ 6.3 billion for the resettlement of refugees from the US war in Afghanistan.
“Why are Republicans refusing to raise the credit limit?” Senate Allocation President Patrick Lehi said. “Why are they willing to show us off as fools in front of the rest of the world? Why are they willing to put so many people out of work?”
The interim spending bill is needed because none of the 12 regular allocation bills for the 2022 fiscal year have been implemented amid controversy between the Senate Minority Democrats and Republicans over military programs and spending levels for the nation.
The interim bill, despite widespread support, did not include Israel’s $ 1 billion plan for the Iron Dome missile defense system. The House passed a separate bill providing for that funding, and according to senators from both parties, the Senate will soon be able to pass that bill.
Kentucky Republican Senator Rand Paul has delayed providing much-needed aid to Afghanistan. He said this assistance should be used to offset the cost of the Iron Dome.
AAA is at risk due to credit limit
According to Fitch estimates, the U.S. AAA sovereign rating could be in jeopardy if Congress does not raise the U.S. federal credit limit and push the Treasury to default.
Echoing the turmoil of the 2011 credit crunch, when S&P Global Ratings downgraded the US rating from the AAA, global financial markets were shaken for a while, with Fitch delaying the default in the Treasury or even defaulting on the US ‘AAA’ position on other items beyond securities. “
Fitch, which has had a “negative outlook” on the US AAA sovereign rating since July 2020, underscores the belief that “the credit limit will be raised or suspended in a timely manner to avoid a default event.”
“But if this is not done in a timely manner, risky policy and reduced financial flexibility will increase the risk of US sovereignty,” Fitch added.
The warning comes ahead of a recent attempt by the Congress Democrats to suspend the federal credit limit, which began in August. Republican lawmakers argued that Democrats should use the so-called compromise route. This is the parliamentary procedure by which the Democrats ignored the ban on the passage of the $ 1.9 trillion Epidemic Aid Bill in March and they are using it to advance the $ 3.5 billion social spending package.