Biden signs debt ceiling bill that will save US from unprecedented default

The President privately signs the law and thanks Congress leaders for the bipartisan effort.

President Joe Biden addresses the nation on Friday, June 2, 2023 in the Oval Office of the White House in Washington on the Budget Accord that removes the federal debt limit and averts a U.S. government default. (Jim Watson/Pool via AP)

washington • With just two days left, President Joe Biden signed legislation on Saturday raising the country’s debt ceiling, averting an unprecedented federal government default.

It was a decidedly low-key end to months of drama that unsettled financial markets at home and abroad, prompting worried pensioners and social organizations to prepare contingency plans should the country fail to pay all its bills.

Rather than hold a public ceremony with lawmakers from both parties — demonstrating the bipartisanship Biden cited in a speech in the Oval Office Friday night — the president signed the law into law privately, reflecting the tight deadline that leaders of the country stood.

The Treasury Department had warned the country would run out of cash starting Monday, sending shockwaves through the US and global economy.

The White House released an image of the President signing the law at the Resolute Desk. In a brief statement, Biden thanked Democratic and Republican congressional leaders for their partnership, a heartfelt message that contrasted with the rancor that originally characterized the debt debate.

“No matter how tough our policies get, we must see everyone not as opponents but as fellow Americans,” Biden said in a video message released after the signing. He said it’s important to “stop the shouting, bring down the temperature, and work together to drive progress, ensure prosperity, and deliver on America’s promise to all.”

The standoff began when Republicans refused to raise the country’s borrowing limit unless Democrats agreed to a spending cut. Finally, the White House began weeks of intense negotiations with House Speaker Kevin McCarthy, R-California, to reach an agreement.

The final agreement, passed by the House of Representatives on Wednesday and the Senate on Thursday, suspends the debt ceiling until 2025 – after the next presidential election – and limits government spending. It gives lawmakers fiscal 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 currently stands at $31.4 trillion, will ensure the government can borrow to pay off debts already incurred.

After Congress passed the law, Biden took the opportunity to deliver his first speech in the Oval Office as president on Friday.

“No one got everything they wanted, but the American people got what they needed,” he said, emphasizing the “compromise and consensus” in the deal. “We averted an economic crisis and collapse.”

When re-elected, Biden praised the achievements of his first term, including support for high-tech manufacturing, infrastructure investments and financial incentives to combat climate change. He also highlighted how he had softened Republican efforts to roll back his agenda and push through deeper cuts.

“We’re cutting spending while also cutting deficits,” Biden said. “We’re protecting key priorities from Social Security to Medicare and Medicaid to veterans and our transformative investments in infrastructure and clean energy.”

Biden’s remarks were the Democratic president’s most detailed comments on the compromise he and his staff negotiated. He largely remained silent in public during the high-risk negotiations, a decision that frustrated some members of his party but was intended to give both sides a chance to reach an agreement and give lawmakers a chance to agree with him.

Biden commended McCarthy and his negotiators for acting in good faith and all congressional leaders for ensuring the law passed quickly. “They acted responsibly and put the country’s well-being ahead of politics,” he said.

In addition to spending restrictions, the 99-page bill changes some policies, including introducing new job requirements for older Americans who receive food aid and approving a natural gas pipeline in Appalachia, which many Democrats oppose. Some environmental regulations have been changed to simplify permitting for infrastructure and energy projects, a move that moderates in Congress have long sought.

The Congressional Budget Office estimates the legislation could actually expand overall eligibility for federal food assistance by removing work requirements for veterans, the homeless and young people leaving foster care.

The bill also increases funding for defense and veterans, cuts some new funding 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 deficits. However, the White House said the IRS’s plans to increase enforcement of tax laws for high earners and businesses would continue.

The deal mandates an automatic 1% overall cut in spending programs if Congress fails to approve its annual spending bills — a measure aimed at pressuring lawmakers from both parties to reach a consensus before the fiscal year ends in September.

More Democrats supported the bill than Republicans in both chambers, but both parties were critical of its passage. In the Senate the balance was 63 to 36, with 46 Democrats and Independents and 17 Republicans in favor, 31 Republicans plus four Democrats and one Independent standing with opposing Democrats.

The vote in the House of Representatives was 314 to 117.

Justin Scaccy

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