US agreement on emergency budget, financial concerns not over

After the US House of Representatives, the Senate also agreed to an emergency budget. This has averted a threatening partial closure of the federal government at the last minute. The emergency budget is valid until December 3.

Parts of the US government would be shut down if there was no agreement on the budget at a time. The agreement will allow the salaries of hundreds of thousands of civil servants to be paid and national parks and federal museums remain open.

In addition, more than $28 billion will be mobilised for emergency relief after natural violence, such as Hurricane Ida, and some $6 billion for aid to Afghan refugees. President Biden has yet to sign the agreement.

Problems dont pass

The House of Representatives agreed to the emergency budget last week. In the Senate, however, there were objections from the Republicans because the proposal also included a provision which would raise the so-called debt ceiling. Thats the maximum amount the US government can borrow.

According to Republicans, Democrats should start cutting out spending before raising the debt ceiling (28.4 trillion dollars).

In

the end, the emergency budget and debt ceiling are separated, but the problems are not over yet. Minister Yellen (Finance) said this week that the US will reach that debt cap on October 18. It is expected that the federal government can no longer pay its bills after that. Republicans and Democrats must now reach an agreement on raising that ceiling.

Yellen said he feared disaster if the government stopped paying its bills. Confidence in the countrys credit worthiness would be harmed, she said, leading to a financial crisis or recession.