U.S. President Joe Biden and House Speaker Kevin McCarthy have agreed a deal to suspend the debt ceiling until 2025. The proposal must now be voted on by Congress and the Senate. Bitcoin benefits as the proposed DAME tax is blocked by the deal.
What Is The Debt Ceiling?
The debt ceiling is the limit imposed by Congress on how much debt the federal government can accrue.
The current cap on this debt is $31.4 trillion, which the federal government hit back in January of 2023.
Without raising or suspending the debt ceiling, the federal government cannot borrow any more money to fund government expenditures such as welfare or military spending.
The debt ceiling was implemented in 1917 to help the U.S. fund its participation in the First World War.
Since 1960, the U.S. has hit the debt ceiling 78 times, each time voting to raise or temporarily suspend it in order to carry on borrowing money.
This essentially allows the federal government to carry on borrowing as much as they want, paying off old debt with new debt in the decades-long fiat Ponzi scheme.
What Has Been Agreed?
Democratic President Joe Biden and Republican Speaker of the House of Representatives Kevin McCarthy have agreed a deal that would suspend the debt ceiling until January 2025.
This doesn’t actually raise the ceiling; it just means they won’t have to worry about it again until 2025, a year after the next presidential election.
In the meantime, the federal government can continue to borrow money to pay for its expenditures. Additionally, the debt ceiling crisis won’t interfere with the next election.
How Has This Affected The Budget?
There has been compromise from both Democrats and Republicans.
Democrats didn’t want any change to the budget at all, whereas Republicans were hoping to freeze spending for 10 years.
Instead, spending will have to remain flat for 2024 and can only go up by 1% in the 2025 fiscal year.
Defense spending will increase by 3%, but the White House estimates that overall spending will be reduced by approximately $1 trillion.
There have also been some slight tweaks to welfare, with some age requirements increasing as the Republicans were hoping for.
In another victory for Republicans, unspent COVID funds will be recouped.
As far as taxes are concerned, Democrats were able to secure spending on helping the IRS implement current taxes on the wealthy more effectively, but Republicans were able to ensure that no new taxes are raised.
It was also agreed that approval for new energy projects would be streamlined, including renewable and fossil fuel endeavors.
With energy projects being helped along and no new tax increases, the debt ceiling suspension deal is likely to be beneficial for bitcoin miners.
DAME Tax Scrapped
Biden’s controversial Digital Asset Mining Energy tax, which would increase the cost of bitcoin mining by 30%, appears to have been blocked by the proposed agreement.
Representative Warren Davidson confirmed on Twitter that blocking proposed taxes means that the punitive DAME tax will not be included in any new budget.
This represents a massive win for bitcoin miners, who had feared having to leave the United States if the tax had ever been implemented.
The fact that new energy projects will now be easier to get approval for will also be music to the ears of bitcoin miners.
Since miners seek out cheap electricity, and renewable energy often best fits the bill, anything that facilitates renewable energy build-out will only expand the opportunities for bitcoin mining.
Another perhaps less obvious effect of suspending the debt ceiling is that the U.S. government will be free to continue to add to the mounting crisis of inflation.
We will continue to see the dollar decrease in value over the years, which, whilst hardly a pleasant scenario, will only add to the proof that we need a new monetary system based on sound currency.
Nothing fits the bill like bitcoin.
