With just two days left, President Joe Biden signed into law a bill on Saturday that raises the nation’s debt ceiling, averting an unprecedented default on the federal government’s debt.
The White House announced the signing, which took place privately at the White House, in an emailed statement in which Biden thanked congressional leaders for their partnership.
The Treasury Department warned that the country would begin to run short of cash to pay all its bills on Monday, which would have sent shock waves through the US and global economies.
Republicans refused to raise the country’s borrowing limit unless Democrats agreed to cut spending, leading to a standoff that wasn’t resolved until weeks of intense negotiations between the White House and House Speaker Kevin McCarthy of California.
The final deal, passed by the House of Representatives on Wednesday and the Senate on Thursday, suspends the debt limit until 2025 — after the next presidential election — and limits government spending. It gives lawmakers budget targets for the next two years in hopes of ensuring fiscal stability as the political season heats up.
Raising the country’s debt limit, which is now $31.4 trillion, will ensure that the government can borrow to pay off debts already incurred.
“Passing this budget agreement is critical. The stakes couldn’t be higher,” Biden said from the Oval Office on Friday night. “Nothing would be more catastrophic,” he said, than defaulting on the country’s debt.
“Nobody got everything they wanted but the American people got what they needed,” Biden said, stressing “compromise and consensus” in the deal. “We have avoided an economic crisis and economic collapse.”
Biden used the opportunity to detail the achievements of his first term while running for re-election, including support for high-tech manufacturing, infrastructure investments and financial incentives to combat climate change. He also highlighted the ways in which he stymied Republican efforts to roll back his agenda and deliver deeper cuts.
“We’re cutting spending and cutting the deficit at the same time,” Biden said. “We protect important priorities from Social Security to Medicare to Medicaid for Veterans to our transformative investments in infrastructure and clean energy.”
Even as he vowed to continue working with Republicans, Biden has also drawn inconsistencies with the opposition party, particularly when it comes to raising taxes on the wealthy, which the Democratic president has sought.
It’s something that suggested he might need to wait until a second term.
He said, “I will be back.” With your help, I will win.
Biden’s remarks were the most detailed comments from the Democratic president about the settlement he and his staff have negotiated. He has remained largely quiet in public during the high-stakes talks, a decision that frustrated some members of his party, but was meant to give space for both sides to work out a deal and for lawmakers to vote on his desk.
Biden praised McCarthy and his negotiators for working in good faith, and all congressional leaders for ensuring the legislation was passed quickly. “They acted responsibly, putting the country’s interest above politics,” he said.
Overall, the 99-page bill restricts spending over the next two years and changes some policies, including imposing new work requirements for older Americans on food aid and greenlighting an Appalachian natural gas pipeline opposed by many Democrats. Some environmental rules have been modified to help streamline approvals for infrastructure and energy projects — a move moderates in Congress have long sought.
The Congressional Budget Office estimates that it could effectively expand full eligibility for federal food assistance, while eliminating work requirements for veterans, the homeless, and youth leaving foster homes.
The legislation also supports money for defense and veterans, cuts some new funds for the Internal Revenue Service and rejects Biden’s call to roll back Trump-era tax breaks for corporations and the wealthy to help cover the country’s deficit. But the White House said the IRS’ plans to ramp up enforcement of tax laws for high-income earners and corporations will continue.
The agreement imposes an automatic 1% aggregate cut to spending programs if Congress fails to approve annual spending bills — a measure intended to pressure lawmakers from both parties to reach consensus before the fiscal year ends in September.
In both houses, Democrats supported the legislation more than Republicans, but both parties were critical to its passage. In the Senate, the tally was 63-36 including 46 Democrats and independents and 17 Republicans in favor, 31 Republicans along with four Democrats and one independent with Democrats in opposition.
The vote in the House of Representatives was 314-117.
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