Late Thursday, June 1, Congress passed legislation to suspend the U.S. debt ceiling until 2025 and sent it to the President to be signed into law. The “Fiscal Responsibility Act of 2023” (H.R. 3746), passed the House on May 31 and the Senate on June 1, and suspends the debt ceiling while funding the government for the next two years through 2025. The legislation narrowly avoided the U.S. defaulting on its debt – which would have resulted in disastrous economic effects in the U.S. and around the globe – which was set to occur on Monday, June 5.
The Fiscal Responsibility Act reduces the national deficit by an estimated $1.5 trillion through cuts to federal government spending over the next decade, including a $20 billion reduction in funding to the IRS from the Inflation Reduction Act (IRA). It also rescinds approximately $28 billion in unobligated funds from COVID-19 relief packages. Climate and clean energy portions of the IRA are left unchanged.
Suspending the debt ceiling ensures that the U.S. does not default on its existing debts, which would result in catastrophic economic effects which would drastically devalue the U.S. dollar globally, resulting in losses to property values, pensions and retirement savings, and drops in the stock market. The Fiscal Responsibility Act is the result of bipartisan work between both chambers of Congress and the White House, avoids that result and we applaud its passage.
