On Sunday, President came to an agreement with Republicans to increase the debt limit. This will be put in the Senate and the house today the bill has to be passed. This is a great relief for China and Japan as there were talks that if the debt limit is not increased, US will go for Default which will affect their economy and in fact the global economy.
President is authorized to increase the max. debt limit by 400 billion immediately and an additional increase of 500 billion in debt ceiling has also been authorized to the President. The present debt limit is 14.3 tr. and it will reach 24 tr. over Ten years. US has gone for the increase in debt limit 68 times from 1960.
The increase in debt limit is not the solution for US. This is going to be a temporary relief for them. They have to plan such that they are reducing their spending and they have to control their budget so that there is no budget deficit in future.
Saravanan
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