US military spending could plunge to lowest since Cold War: WSJ
The Wall Street Journal says the debt ceiling bill implies a cut in the defense budget in real terms after inflation.
A report published by The Wall Street Journal pointed out that for the first time since the Cold War, the percentage of US defense spending could plunge below three percent, indicating that the new debt ceiling agreement between the White House and Republicans is one of the primary reasons for the decline.
The agreement, concluded last week, increases US defense spending to about $885 billion in 2023, an 11% increase beyond the $800 billion designated in the current budget. The US military spending is anticipated to rise to $895 billion by 2025.
But The Wall Street Journal highlighted after US President Joe Biden signed on Friday the bill into law that the figure implies a cut in the defense budget in real terms after inflation.
On Thursday, the bipartisan debt bill was approved by the US Senate after passing the House of Representatives the day before.
The law extended the debt ceiling limit to January 1, 2025, averting a first-ever default just days before the deadline, which had earlier been extended to June 5.
Titled Fiscal Responsibility Act of 2023, the law grants the government authorization to extend the debt ceiling to renew borrowing and allow the government to meet its obligations.
On Friday, Biden said the bill saved the country from "economic collapse", adding that the bill was the result of a bipartisan compromise where "no one got everything they wanted."
He thanked Republicans for negotiating in good faith and said Congress has preserved "the full faith and credit of the United States."
The United States was on the brink of defaulting on its vast $31.4 trillion sovereign debt. A default would severely limit the government's ability to borrow more or pay state debts. It might also trigger a financial upheaval in other nations, causing prices and mortgage rates to fall.
Despite the deal, the US and its economy's reputation have been badly affected by these events. Rating agency Fitch said that it is keeping the US' "AAA" credit rating on negative watch.