US debt ceiling crisis resolved

Disagreement over whether Democrats or Republicans gained most from the deal to end the US debt ceiling crisis was inevitable following the agreement reached by President Joe Biden and House of Representatives Speaker Kevin McCarthy. As Adam Creighton reports on Wednesday, influential Texas congressman Chip Roy, a leader of the Republican far-right Freedom Caucus, reckons his party was trounced in the negotiations, attributing that to the White House negotiating team or Mr Biden being cannier than some give him credit for.

The contrary view of The Wall Street Journal is that “the deal is a significant victory for Republican Party priorities”, showing “what can happen when House Republicans stick together”. Between those polarities lies the real significance of the deal – the first major legislative compromise since Republicans took control of the house in January.

With a June 5 deadline approaching that could have triggered an unprecedented default on US government debt and a crisis across the world economy, bipartisanship and good sense triumphed. That is a hopeful sign amid the rancour that has bedevilled US politics in recent years.

Republican fiscal hawks are indignant over concessions made by Mr McCarthy. Far-left Democrats are cross about Mr Biden’s concessions. The Republicans’ biggest demand was to cut discretionary spending to 2022 levels, in effect a $US131bn ($201bn) reduction, and cap spending growth at 1 per cent a year for 10 years. It will stay at current levels next year. And the debt ceiling will be suspended until 2025, ensuring no congressional battles that could affect next year’s presidential election.

Democrats “won’t have to worry about an austerity-induced recession in the lead-up to the 2024 election”, Creighton reports. But Republicans won big gains, too – tougher welfare rules, restarting interest repayments on student loans and none of the tax increases far-left Democrats demanded. Extremists in both parties should accept, as The Wall Street Journal said, that the debt ceiling deal is a good one, worth passing. Using the crisis for political advantage was never a good idea for either side or for the world economy.