Shortly before the end of a countdown, for which the so-called debt ceiling was responsible, policymakers in the United States were able to agree on a spending deal. And now, above all, the further disappearance of fiscal discipline is securing the solvency of the US government until the end of July 2021, i.e. until well after the next congressional and presidential elections. The „Budget Control Act“ of 2011 is now finally history, the annual deficit in the federal budget is estimated to rise to about 1 trillion US dollars.
In fact, the debt ceiling, as the legal maximum limit, is intended to keep the total amount of debt that the state is allowed to collect in check. In recent weeks, estimates had become known that the resources of the Minister of Finance would probably not last until October, as was initially assumed. Now Congress has begun the last week of its session before the summer recess and an agreement has apparently been reached on public finances.
However, the compromise reached not only includes the suspension of the debt ceiling, but also the opening of the cock on the expenditure side. To ensure that the respective voter clientele of republicans and democrats is well served in the coming year, an overall increase in expenditure of around 50 billion US dollars is planned. This increase of around four percent will be followed in 2021 by a further small plus of around 5 billion. As in the past, the increased expenditure is to benefit both the military and social interests. In addition, automatic spending cuts that would otherwise have been implemented shortly under the 2011 Budget Control Act will be overridden.
It is not all too surprising that shortly before the summer break in the USA the „fiscal cliff“ was circumnavigated by the deputies. Both party blocs obviously did not want to risk that the federal employees would look into the tubes for the second time in a year with their salary payments. But also in the international environment, a continued poker game about public finances would have damaged the reputation in the world.