With just two days to spare, President Joe Biden signed legislation Saturday that lifts the nation’s debt ceiling, averting an unprecedented default on federal government debt.
The Treasury Department had warned that the country would start running out of cash to pay all its bills on Monday, sending shock waves through the US and global economies.
Republicans have refused to raise the nation’s borrowing limit unless Democrats agree to cut spending, leading to a stalemate that was only resolved after weeks of intense negotiations between the White House and House Speaker Kevin McCarthy, R-Calif.
The final deal, which passed the House on Wednesday and the Senate on Thursday, suspends the debt ceiling until 2025 – after the next presidential election – and limits government spending.
THIS IS A BREAKING NEWS UPDATE. AP’s previous story follows below.
President Joe Biden is expected to sign legislation to raise the debt ceiling on Saturday, avoiding Monday’s deadline when the Treasury warned the United States would begin to run out of cash to pay all its bills.
The bipartisan measure, passed by the House on Wednesday and the Senate on Thursday, averts the potential for an unprecedented government default that would have rocked the U.S. and global economies. Raising the country’s debt limit, now at $31.4 trillion, will ensure that the government can borrow to pay off debts already incurred.
“The adoption of this budgetary agreement was essential. The stakes couldn’t have been higher,” Biden said from the Oval Office Friday night. “Nothing would have been more catastrophic,” he said, than to default on the country’s debt.
The deal was struck by Biden and House Speaker Kevin McCarthy, giving Republicans some of their demanded federal spending cuts but keeping the line on top Democratic priorities. It raises the debt ceiling through 2025 – after the 2024 presidential election – and gives lawmakers budget targets for the next two years in hopes of ensuring fiscal stability as the political season heats up .
“Nobody got everything they wanted, but the American people got what they needed,” Biden said, pointing to “compromise and consensus” in the deal. “We avoided an economic crisis and an economic collapse.”
Biden took the opportunity to detail first-term accomplishments as he seeks re-election, including support for high-tech manufacturing, infrastructure investments and financial incentives to fight change. climatic. He also pointed to the ways he blunted Republican efforts to roll back his agenda and achieve deeper cuts.
“We’re cutting spending and cutting deficits at the same time,” Biden said. “We are protecting important priorities, from Social Security to Medicare to Medicaid to our transformational investments in infrastructure and clean energy.”
The Senate on Thursday approved the debt ceiling agreement negotiated by the Biden administration and President Kevin McCarthy.
Despite pledging to continue working with Republicans, Biden has also drawn contrasts with the opposing party, particularly when it comes to raising taxes on the wealthy, which the Democratic president has called for. .
This is something he suggested should wait until a second term.
“I will come back,” he said. “With your help, I will win.”
Biden’s remarks were the Democratic president’s most detailed comments on the compromise he and his team negotiated. He remained largely silent publicly during the high-stakes talks, a move that frustrated some in his party but was intended to give the two sides space to reach a deal and lawmakers to vote it into his office.
Biden praised McCarthy and his negotiators for acting in good faith, and all congressional leaders for ensuring swift passage of the legislation. “They acted responsibly and put the good of the country before politics,” he said.
Overall, the 99-page bill limits spending for the next two years and changes some policies, including imposing new work requirements on older Americans receiving food assistance and greenlighting a gas pipeline from Appalachia that many Democrats oppose. Some environmental rules have been changed to help streamline approvals for infrastructure and energy projects — a move long sought by moderates in Congress.
The Congressional Budget Office believes it could actually expand full eligibility for federal food assistance, with the elimination of work requirements for veterans, the homeless, and young people leaving homeless families. ‘welcome.
The legislation also bolsters funds for defense and veterans, cuts new funds for the Internal Revenue Service and rejects Biden’s call to reverse Trump-era tax breaks on corporations and the wealthy to help cover the country’s deficits. But the White House said IRS plans to strengthen tax enforcement for high-income people and corporations would continue.
The deal mandates an automatic 1% overall reduction in spending programs if Congress does not approve its annual spending bills – a move designed to pressure lawmakers on both sides to reach a consensus before the end of the fiscal year in September.
In both chambers, more Democrats supported the legislation than Republicans, but both parties were critical to its passage. In the Senate, the tally was 63 to 36, including 46 Democrats and independents and 17 Republicans in favor, 31 Republicans with four Democrats and one independent who caucus with opposing Democrats.
The vote in the House was 314-117.
PA Congressional Correspondent Lisa Mascaro contributed to this report.