Let us have a glimpse of major points discussed in the deal
- Debt ceiling to be raised for 2 years
- Cuts spending by $50 billion
- $10 billion of new IRS funding clawed back
- No budget caps after 2025
- No new taxes or government programs
- Boost in defense and VA spending
- Domestic program spending frozen for one year
- Student loan repayments are yet to restart again after pandemic pause
This deal was agreed to “in principle” with still “a lot of work to do” according to Speaker McCarthy.
Spending “cuts” are just 0.2% of GDP.
Debt ceiling limit has raised 78 times since 1960 because, people also know that this limit will be raised now, if it is not raised, US will default which no one can imagine even in thier dreams.
But this time, raising ceiling limit will have different problems to tackle, why?
- On one side inflation is peaking out & interest rates are rising, you have pile of debt on which you are paying good amount of interest. You increased that limit and you will be liable to pay more amount of interest to that amount of limit which they have been raising for the upcoming 2 years !!
- You have more cash in your hand but worth of which is going down steeply, thanks to inflation
- Consumer spending will increase which will contribute to the GDP showing good numbers but remember this is not direct growth, it is debt fueled growth, you are growing each day by taking extra leverage
- This time without even money printing, liquidity in the market will increase and asset prices will go up in no time but inflation is here to stay and suffering is here to stay for the people whose only income source is paycheck
- All this picture will be portrayed in a positive way, saying that it’s for a greater good to prevent the default but think whether it is helping you or bringing chaos
Remeber, debt ceiling movie is not over yet, leaders in both parties must convince their members to vote for the agreement !!
