President Joe Biden on Saturday signed a bill that lifts the US government’s $31.4 trillion debt ceiling, averting what would have been a first-ever default.
The Treasury Department had warned it would be unable to pay all its bills on Monday if Congress failed to act by then, which would have triggered an unprecedented default.
The White House released a 10-second video clip of Biden signing the bill in the Oval Office, but opted to avoid the type of public ceremony that often accompanies the signing of hard-fought measures.
The White House released a 10-second video clip of Biden signing the bill in the Oval Office, but opted to avoid the type of public ceremony that often accompanies major measures
Republicans had refused to raise the country’s borrowing limit unless Democrats agreed to cut spending, leading to a standoff that was not resolved until weeks of intense negotiations between the White House and McCarthy.
The final agreement, passed by the House on Wednesday and the Senate on Thursday, suspends the debt limit until 2025 – after the next presidential election – and restricts government spending.
It gives lawmakers budget targets for the next two years in hopes of assuring fiscal stability as the political season heats up.
Raising the nation’s debt limit, now at $31.4 trillion, will ensure that the government can borrow to pay debts already incurred.
‘Passing this budget agreement was critical. The stakes could not have been higher,’ Biden said in a speech from the Oval Office on Friday evening. ‘Nothing would have been more catastrophic,’ he said, than defaulting on the country’s debt.
‘No one got everything they wanted but the American people got what they needed,’ Biden said, highlighting the ‘compromise and consensus’ in the deal. ‘We averted an economic crisis and an economic collapse.’
‘Our economy would have been thrown in recession,’ Biden intoned in a low voice.
He also used the address to pledge to go after ‘tax cheats’ and hike taxes on the wealthy, even after Republican negotiators nixed his revenue proposals as a way to pay for spending that gets trimmed under the deal.
‘We also have to raise revenue to go after tax cheats and make sure everybody’s paying their fair share,’ Biden said.
He repeated his pledge not to hike taxes on people earning more than $400,000 per year, and defended a boost in funds for IRS audits and technology – although the debt deal actually pares back an $80 billion infusion by about $20 billion.
He also called for closing ‘special interest tax loopholes for big oil, crypto traders, hedge fund billionaires, saving taxpayers billions of dollars.’
‘Republicans defended every single one of these special interest loopholes. Every single one. But I’m going to come back with your help. I’m going to win,’ he vowed – although to become law the legislation must originate in the Republican-dominated House.
‘Passing this budget agreement was critical. The stakes could not have been higher,’ Biden said in a speech from the Oval Office on Friday evening
House Speaker Kevin McCarthy told his caucus that Republicans were able to achieve a rare reduction in government spending while suspending the debt ceiling until January 2025
Seventy one conservative Republicans voted no – claiming the package doesn’t cut spending enough, will add $4trillion to the debt and represented a cave to the White House
Biden also used the opportunity to itemize the achievements of his first term as he runs for reelection, including support for high-tech manufacturing, infrastructure investments and financial incentives for fighting climate change. He also highlighted ways he blunted Republican efforts to roll back his agenda and achieve deeper cuts.
‘We´re cutting spending and bringing deficits down at the same time,’ Biden said. ‘We’re protecting important priorities from Social Security to Medicare to Medicaid to veterans to our transformational investments in infrastructure and clean energy.’
Biden’s remarks were the most detailed comments from the Democratic president on the compromise he and his staff negotiated.
He largely remained quiet publicly during the high-stakes talks, a decision that frustrated some members of his party but was intended to give space for both sides to reach a deal and for lawmakers to vote it to his desk.
Biden praised McCarthy and his negotiators for operating in good faith, and all congressional leaders for ensuring swift passage of the legislation. ‘They acted responsibly, and put the good of the country ahead of politics,’ he said.
Overall, the 99-page bill restricts spending for the next two years and changes some policies, including imposing new work requirements for older Americans receiving food aid and greenlighting an Appalachian natural gas pipeline that many Democrats oppose.
Some environmental rules were modified to help streamline approvals for infrastructure and energy projects – a move long sought by moderates in Congress.
The Congressional Budget Office estimates it could actually expand total eligibility for federal food assistance, with the elimination of work requirements for veterans, homeless people and young people leaving foster care.
The legislation also bolsters funds for defense and veterans, cuts back some new money for the Internal Revenue Service and rejects Biden’s call to roll back Trump-era tax breaks on corporations and the wealthy to help cover the nation´s deficits.
Republicans extracted some concessions, but did not get their full wish-list for the bill
But the White House said the IRS’ plans to step up enforcement of tax laws for high-income earners and corporations would continue.
The agreement imposes an automatic overall 1% cut to spending programs if Congress fails to approve its annual spending bills – a measure designed to pressure lawmakers of both parties to reach consensus before the end of the fiscal year in September.
In both chambers, more Democrats backed the legislation 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 who caucuses with the Democrats opposed.
The vote in the House was 314-117.