The US has had a Federal debt limit since 1917. I have no idea why it was ever introduced.
But it is only in recent times that it has been used as a sort of virility test between the parties.
A failure to lift the limit in the next week or so would have meant that the creditworthiness of the US government would be damaged, probably permanently.
It remains to be seen what the Republicans have gained through their threats and subsequent agreement in principle with President Biden. If it is voted through, this deal should mean that there will be no need to raise the limit before the next Presidential Election.
It is important to remember that the debts falling due to be repaid were used to boost spending , or to allow tax reductions, each of which were voted through by Congress.
40% of the spending is untouchable. This is so called Mandatory spending. This includes Medicare.
The US has the most expensive healthcare system in the world, yet much of that is excluded from consideration in the search for savings.
Social Security (pensions) is 35% of mandatory spending, It too is excluded from cuts
The focus has to be on so called Discretionary Spending, which comes to only to 28% of the total.
Half of Discretionary goes on the miliary. That is hard to cut in light of the War in Ukraine. There may be room to close surplus military bases in the US itself but no member of Congress wants a base closed in his or her District.
The rest of Discretionary spending is mostly routine administration, including on agencies like Homeland Security. The deal between Biden and McCarthy seems to concentrate in this area. trimming the civil service administration and agencies.
There is a distrust of “Government “, as such ,among a section of the public.
Republicans even wanted to “defund” the inland Revenue!
They also wanted to deny the authorities funds to pursue unpaid taxes
The United States needs a complete overhaul of it spending and tax policies. Tax deductions and shelters should be eliminated, and the tax code simplified. No category of spending should be exempt from economies, at least while the debt/GDP ratio exceeds 60% of the GDP.
Given that the $ is the foundation of the global financial system, and its value under pins the world banking system, it is worrying that we will probably face another debt ceiling drama in a couple of years time.