President Joe Biden is set to sign the Fiscal Responsibility Act, legislation that suspends the U.S. government’s debt limit through January 2025 and avoids a potentially disastrous default on U.S. financial obligations.

He is scheduled to deliver remarks on the legislation’s passage Friday evening.

The U.S. Senate voted Thursday night 63-36 in support of the measure. Democratic senators John Fetterman, Elizabeth Warren, Ed Markey, Jeff Merkley and Bernie Sanders, who is an independent but caucuses with Democrats, joined 31 Republicans in voting against the bill.

“Tonight, senators from both parties voted to protect the hard-earned economic progress we have made and prevent a first-ever default by the United States,” Biden said in a statement Thursday.

The bill allows the government to continue to borrow more money over the next 19 months to meet its obligations, exceeding the current $31.4 trillion debt limit.

Despite objections by far-right Republican lawmakers who said it did not go far enough to cut spending and from Democratic progressives who said it trimmed too much, the bill passed the House of Representatives under a 314-117 vote Wednesday night.

The legislation does not set a new monetary cap, but the borrowing authority would extend to January 2, 2025, two months past next year’s presidential election.

In addition, the legislation calls for maintaining most federal spending at the current level in the fiscal year starting in October, with a 1% increase in the following 12 months.

“With the latest debt limit debate now behind us, our leaders must get serious about reforming this process so that we never again jeopardize the full faith and credit of the United States,” Kelly Veney Darnell, interim CEO of the Bipartisan Policy Center, said in a statement sent to VOA.

“Bipartisan legislation like the Responsible Budgeting Act, introduced in the last Congress, would require lawmakers to routinely address our fiscal health by annually debating and voting on significant deficit reducing legislation — but without the full faith and credit of the country hanging in the balance,” she said.

Republican House Speaker Kevin McCarthy, who negotiated the deal with Biden, told reporters that getting the bill passed “wasn’t an easy fight.” He emphasized the budget savings and criticized Democrats who wanted to separate the debate about future government spending from the need to suspend the debt limit so current financial obligations could be met.

“We put the citizens of America first and we didn’t do it by taking the easy way,” McCarthy said. “We didn’t do it by the ways that people did in the past by just lifting [the debt ceiling]. We decided you had to spend less, and we achieved that goal.”

McCarthy said he intends to follow Wednesday’s action with more efforts to cut federal spending.

The measure does not raise taxes on the wealthy, a step wanted by Democrats. Nor will it stop the national debt total from continuing to increase, perhaps by another $3 trillion or more over the next year-and-a-half until the next expiration of the debt limit.

Other pieces of the legislation include a reduction in the number of new agents hired by the country’s tax collection agency, a requirement that states return $30 billion in unspent coronavirus pandemic assistance to the federal government and extending from 50 to 54 the upper age bracket for those required to work in order to receive food aid.

Ken Bredemeier contributed to this report.
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The nation’s employers stepped up their hiring in May, adding a robust 339,000 jobs, well above expectations and evidence of strength in an economy that the Federal Reserve is desperately trying to cool. 

Friday’s report from the government showed that the unemployment rate rose to 3.7%, from a five-decade low of 3.4% in April. 

The stronger hiring demonstrates the job market’s resilience after more than a year of rapid interest rate increases by the Fed. Many industries, from construction to restaurants to health care, are still adding jobs to keep up with consumer demand and restore their workforces to pre-pandemic levels. 

Having imposed 10 straight rate hikes since March 2022, the Federal Reserve is widely expected to skip a rate increase when it meets later this month, though it may resume its hikes after that. Chair Jerome Powell and other Fed officials have made clear that they regard strong hiring as likely to keep inflation persistently high because employers tend to sharply raise pay in a tight job market. Many of these companies then pass on their higher wage costs to customers in the form of higher prices. 

The May jobs report adds to other recent evidence that the economy is still managing to chug ahead despite long-standing predictions that a recession was near. Consumers ramped up their spending in April, even after adjusting for inflation, and sales of new homes rose despite higher mortgage rates. 

Some cracks in the economy’s foundations, though, have begun to emerge. Home sales have tumbled. A measure of factory activity indicated that it has contracted for seven straight months. 

And consumers are showing signs of straining to keep up with higher prices. The proportion of Americans who are struggling to stay current on their credit card and auto loan debt rose in the first three months of this year, according to the Federal Reserve Bank of New York. 

Fed officials are expected to forgo a rate increase at their June 13-14 meeting to allow time to assess how their previous rate hikes have affected the inflation pressures underlying the economy. Higher rates typically take time to affect growth and hiring. The Fed wants to avoid raising its key rate to the point where it would slow borrowing and spending so much as to cause a deep recession. 

The U.S. economy as a whole has been gradually weakening. It grew at a lackluster 1.3% annual rate from January through March, after 2.6% annual growth from October through December and 3.2% from July through September. 

The Federal Reserve’s so-called Beige Book, a collection of anecdotal reports mostly from businesses across the country, reported this week that the pace of hiring gains in April and May had “cooled some” compared with previous reports. Many companies reported that they were fully staffed. 

At the same time, despite some high-profile job cuts by financial and high-technology companies, the pace of layoffs remains unusually low. The number of people seeking first-time unemployment benefits, a proxy for layoffs, barely rose from a low level last week.

Many employers are still engaged in so-called “catch-up hiring,” particularly in such sectors as restaurants, hotels and entertainment venues. Even as customer demand in these industries has spiked, the number of employed workers remains below pre-pandemic levels.

Consumers, who drive roughly two-thirds of economic activity, are still mostly spending at a solid pace, despite higher prices and borrowing rates. Their spending jumped 0.8% in April, the fastest monthly pace since January, as Americans flocked to airports, restaurants and concert halls, among other places. 
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A combination of crises, including high indebtedness, global inflation, the war in Ukraine, and a slow recovery from the COVID-19 pandemic has left many countries in the developing world without sufficient employment opportunities to support their populations, according to a report from the International Labor Organization.

The ILO’s annual Monitor on the World of Work finds that in much of the developing world, employment rates have still not returned to pre-pandemic levels, even as developed countries like the U.S. face labor shortages and wage inflation.

“The findings of this report are a stark reminder of growing global inequalities,” ILO Director-General Gilbert F. Houngbo said in a statement.

Houngbo called for concerted international investment in job creation in developing nations through an effort the ILO has called the Global Coalition for Social Justice.

“Investing in people through jobs and social protection will help narrow the gap between rich and poor nations and people,” he said. “The coalition will bring together a wide range of multilateral bodies and stakeholders. It will help to position social justice as the keystone of a global recovery, and make it a priority for national, regional, and global policies and actions.”

Regional differences

According to ILO data, unemployment is particularly acute in Africa and many Arab countries that, according to the agency’s projections, will remain below pre-pandemic levels of employment at least through the end of 2023.

In North Africa, for example, the unemployment rate is projected to be 11.2% in 2023, still above the 10.9% measured in 2019.

Other regions around the globe have enjoyed a more robust recovery. Unemployment is forecast to be 6.7% in Latin America and the Caribbean for the year, compared to 8% in 2019. In the region the ILO classifies as Northern, Southern, and Western Europe, unemployment will be 6.3% this year, compared to 7% in 2019. In Central and Western Asia, the rate will be 7.8% this year, compared to 9.2% prior to the pandemic.

‘Jobs gap’ revealed

Most assessments of global labor force participation rely on official unemployment reports, which often undercount the number of people who would work if they had the opportunity. To address the undercount, the ILO has developed a metric it refers to as the “jobs gap,” which supplements the official reports with information from labor force surveys to paint a fuller picture of individual countries’ job markets.

The global unemployment rate, according to ILO data, is 5.3% in 2023, lower than the pre-pandemic rate of 5.5% measured in 2019. However, the ILO argues that the jobs gap data shows a real unemployment rate of 11.7% globally, a little more than double the official rate.

The size of the jobs gap varies greatly across countries. On average, low-income countries face a jobs gap of 21.5%, the agency finds. That compares with just 11% in middle-income countries and 8.2% in high-income countries.

The disparity also varies by gender, with women experiencing a 14.5% gap worldwide compared to a 9% gap for men.

Heavily indebted countries

A lack of jobs is particularly acute in countries that are already experiencing high levels of indebtedness. Global increases in interest rates have made it significantly more expensive for many developing countries to service their debt, leaving less money for domestic investment.

The International Monetary Fund considers countries to be in “debt distress” when default or debt restructuring is either ongoing or imminent. According to ILO data, the jobs gap in debt-distressed countries is 25.7% on average, compared to just 11% in developing countries the IMF views as being at low risk of distress. Again, the gap for women in debt-distressed countries is especially high, at 31%.

“The correlation between debt distress and the jobs gap rate points to the critical importance of international financial support for debt-distressed countries in promoting both an economic and a job recovery,” the report finds.

Investment pays dividends

The report makes the case that social protection regimes that provide income support to the vulnerable — particularly old-age pension programs — can be a powerful job-creating force.

The report notes that there is a high correlation between countries that do not provide old-age pensions or other financial support to the elderly and significant jobs gaps. It estimates that the introduction of universal old-age pensions in developing countries where they do not currently exist would increase GDP by 14.8% over 10 years.

Old-age pensions, the report finds, are “a potentially extraordinary policy lever for sustainable development and social justice, and furthermore one that is backed by the strong international consensus on social protection floors.”

‘A particular crisis’

Cynthia M. Hewitt, director of the International Comparative Labor Studies Program at Morehouse College, told VOA that the ILO findings square with what she has observed in her work, which focuses primarily on Africa.

“Unemployment is a particular crisis, because a lot of small businesses went out of business during the pandemic,” she said. “Little restaurants, small hotels, they just simply went out of business.”

Hewitt said the ILO’s partial prescription for the problem — stronger social support programs — is necessary but difficult to achieve.

“There should be a floor of social support for people,” she said. “However, it’s not a zero-sum game. It requires the political will to shift the use of funds, and that’s what’s usually not available.”

Hewitt was also cautious about the call for wealthy countries to invest in job creation in the developing world, pointing out that in Africa especially, there is a long history of powerful foreign interests exerting outsized control over domestic economies.

She said it is important to maintain local control and endorsed a policy put forward by Patrice Lumumba, the former prime minister of the Republic of the Congo in 1960, who advocated a 49% limit on the foreign ownership share of any company in the country.
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The U.S. Senate could vote as soon as Thursday on a measure to suspend the government’s borrowing limit until early 2025 to avert a first-ever default when the United States in four days runs out of cash to pay its bills.

The House of Representatives overwhelmingly voted Wednesday night, with wide support from Republican and Democratic lawmakers alike, to allow the government to continue to borrow more money over the next year-and-a-half to meet its financial obligations, exceeding the current $31.4 trillion debt limit.

The legislation does not set a new monetary cap, but the borrowing authority would extend to January 2, 2025, two months past next year’s presidential election.

In addition, the legislation calls for maintaining most federal spending at the current level in the fiscal year starting in October, with a 1% increase in the following 12 months.

“The responsible thing for America is to pass it,” one Senate leader, Democrat Dick Durbin, told reporters. Durbin said he expects the bill to be approved Thursday night or Friday.

Both Democratic Senate Majority Leader Chuck Schumer and Mitch McConnell, the Senate Republican leader, support suspension of the debt limit and are calling for swift passage of the legislation so it can be sent to President Joe Biden for his signature.

Schumer told the Senate, “Time is a luxury the Senate does not have if we want to prevent default. There is no good reason — none — to bring this process down to the wire. … I hope we see nothing even approaching brinksmanship. The country cannot afford that now.”

The timetable for a Senate vote was uncertain, with a handful of senators calling for votes on changes they want to make to the House-passed legislation. If the Senate approves any of their amendments, the legislation would have to be sent back to the House for another vote.

“Any change to this bill that forces us to send it back to the House would be entirely unacceptable,” Schumer said. “It would almost guarantee default.”

The House approved the legislation on a 314-117 vote despite objections by far-right Republican lawmakers who said it did not go far enough to cut spending and from Democratic progressives who said it trimmed too much.

Seventy-one lawmakers from the majority Republican party in the House voted against the bill, as did 46 Democrats.

In a statement following Wednesday’s vote, Biden celebrated the agreement as a “bipartisan compromise.”

“It protects key priorities and accomplishments from the past two years, including historic investments that are creating good jobs across the country,” Biden said. “And, it honors my commitment to safeguard Americans’ health care and protect Social Security, Medicare, and Medicaid [pensions and health care insurance for older Americans and welfare payments for impoverished people]. It protects critical programs that millions of hardworking families, students, and veterans count on.”

Republican House Speaker Kevin McCarthy, who negotiated the deal with Biden, told reporters that getting the bill passed “wasn’t an easy fight.” He emphasized the budget savings and criticized Democrats who wanted to separate the debate about future government spending from the need to suspend the debt limit so current financial obligations could be met.

“We put the citizens of America first and we didn’t do it by taking the easy way,” McCarthy said. “We didn’t do it by the ways that people did in the past by just lifting [the debt ceiling]. We decided you had to spend less and we achieved that goal.”

McCarthy said he intends to follow Wednesday’s action with more efforts to cut federal spending.

The measure does not raise taxes, nor will it stop the national debt total from continuing to increase, perhaps by another $3 trillion or more over the next year-and-a-half until the next expiration of the debt limit.

Other pieces of the legislation include a reduction in the number of new agents hired by the country’s tax collection agency, a requirement that states return $30 billion in unspent coronavirus pandemic assistance to the federal government and extending from 50 to 54 the upper age bracket for those required to work in order to receive food aid.
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Вперше річний безмитний режим для української сталі США встановили 9 травня 2022 року
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Zimbabwe’s government has instituted several measures it says will increase demand for the local currency and raise its value, as well arrest demand for the U.S. dollar. But as Columbus Mavhunga reports from Harare, economists say the new measures will not work as Zimbabweans have lost faith in the local dollar which continues sliding against the greenback. Videographer: Blessing  Chigwenhembe     
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The U.S. House of Representatives approved legislation to suspend the government’s borrowing limit until early 2025, a step toward averting a Washington political showdown five days before the country could run out of money to pay its bills.

With a late Wednesday vote of 314-117, the bill passed and now heads to the Senate with passage expected by week’s end, and eventually Biden’s signature at the White House. The measure suspends the government’s current $31.4 trillion debt ceiling.

Far-right Republican lawmakers had criticized the deal negotiated by Democratic President Joe Biden and Republican House Speaker Kevin McCarthy for not cutting enough in future government spending, while some progressive Democrats said it trims too much.

The contentious fight over the legislation is also turning into a test of McCarthy’s hold on the top leadership post in the House, which he won in January after 15 rounds of voting and after he promised archconservatives a greater say in attempting to rein in government budgets. The U.S. chronically records annual trillion-dollar deficits, adding to the long-term debt total.

Under informal Republican rules managing the House with a narrow majority, McCarthy had pledged to not bring up legislation for a full House vote without the support of at least 111 members of his 222-member Republican caucus. Before the vote, he expected at least 150 Republicans would support the debt ceiling suspension.

If McCarthy were to lose 111 Republicans on the debt ceiling vote, at least 107 of the 213 House Democrats would need to support it for the legislation to pass.

“House Democrats are going to make sure the country doesn’t default. Period. Full stop,” House Democratic leader Hakeem Jeffries told reporters early Wednesday.

One Freedom Caucus member, Representative Ken Buck, acknowledged to NBC News that the conservative lawmakers do not have enough votes to kill the legislation.

“The nation will not default,” Buck said.

But he and other Republicans have voiced skepticism about the legitimacy of Treasury Secretary Janet Yellen’s warning that the government will run out of money next Monday to meet all its financial obligations, including cash to pay interest on government bonds, pensions to older Americans and salaries to the military and government workers.

The House Rules Committee sent the legislation to the full House on a 7-6 vote Tuesday night that showed some of that discontent, with two Republicans voting against advancing the bill.

The proposal before Congress includes waiving the existing borrowing limit until January 2025 and a two-year budget deal that keeps federal spending flat in 2024 and increases it by 1% in 2025. The measure does not raise taxes, nor will it stop the national debt total from continuing to increase, perhaps by another $3 trillion or more over the next year and a half.

Other pieces of the legislation include a reduction in the number of new agents hired by the country’s tax collection agency, a requirement that states return $30 billion in unspent coronavirus pandemic assistance to the federal government and extending from 50 to 54 the upper age bracket for those required to work in order to receive food aid.

Some liberal Democratic lawmakers have objected to the deal, saying it cuts too much in social welfare spending or holds some programs at a flat spending level. Republicans say it allows for more spending than legislation they approved weeks ago calling for steeper cuts and a debt ceiling extension of less than a year totaling about $1.5 trillion.

Biden insisted on a new debt ceiling that extended beyond the November 2024 presidential election in which he is seeking a second four-year term, so the current contentious debate would not be repeated during the political campaign next year.

One Republican critic of the debt ceiling legislation, Representative Dan Bishop, complained Tuesday about the length of the debt ceiling extension.

“It removes the issue from the national conversation during the presidential election to come,” Bishop said. “How could you more successfully kneecap any Republican [presidential candidate] than to take that issue out of his or her hands?”

Biden and McCarthy have both, respectively, been lobbying Democrats and Republicans to pass the measure.

“The agreement prevents the worst possible crisis — a default — for the first time in our nation’s history,” Biden said at the White House last weekend. It “takes the threat of a catastrophic default off the table.”

“The agreement represents a compromise, which means not everyone gets what they want. But that’s the responsibility of governing,” Biden said in a statement.

McCarthy called the bill the “most conservative deal we’ve ever had.”
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