The US Treasury Department had warned that the country would start running out of cash to pay all its bills on Monday, which would have shocked the US and world economies.
With just two days to spare, President Joe Biden signed legislation this Saturday, June 3, that raises the nation’s debt ceiling, avoiding an unprecedented default on the federal government’s debt.
The White House announced the signing, done in private at the presidential residence, in an emailed statement in which Biden thanked congressional leaders for their collaboration.
He Treasury Department it had warned that the country would start running out of cash to pay all its bills on Monday, which would have shocked the US and global economies.
Republicans refused to raise the nation’s debt limit unless Democrats agreed to cut spending, sparking a standoff that was not resolved until after weeks of intense negotiations between the White House and the Speaker of the House. Representatives, Kevin McCarthy, Republican of California.
The final agreement, approved by the House on Wednesday and the Senate on Thursday, June 1, suspends the debt limit until 2025 – after the next presidential elections – and restricts public 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 nation’s debt limit, now at $31.4 trillion, will ensure that the government can borrow to pay off debts already incurred.
“We avoided an economic crisis”
“Approving this budget agreement was essential. The stakes could not have been higher,” Biden said from the Oval Office on Friday night. “Nothing would have been 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, noting the “compromise and consensus” in the deal. “We avoided an economic crisis and an economic collapse.”
Biden took the opportunity to detail the accomplishments of his first term as he runs 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 undermined Republican efforts to roll back their agenda and achieve deeper cuts.
“We are cutting spending and reducing deficits at the same time,” Biden said. “We’re protecting important priorities from Social Security to Medicare, Medicaid, Veterans, and our transformative investments in infrastructure and clean energy.”
Even as he vowed to continue working with the Republicans, Biden also drew contrasts with the opposing party, particularly when it comes to raising taxes on the wealthy, something the Democratic president has sought.
Biden’s comments were the most detailed comments from the Democratic president on the compromise he and his staff brokered. He remained largely publicly silent during the high-level talks, a decision that frustrated some members of his party but was intended to allow space for both sides to reach an agreement and for lawmakers to vote at the congressional desk. he.
Biden praised Kevin McCarthy and his negotiators for operating in good faith, and all congressional leaders for ensuring speedy passage of the legislation. “They acted responsibly and put the good of the country before politics,” he said.
The US bill
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 approving a natural gas pipeline in Appalachia. which many Democrats oppose. Some environmental rules have been changed to help expedite approvals for infrastructure and energy projects, a move long sought by moderates in Congress.
Fitch Ratings said on Friday that the United States’ AAA credit rating would remain on negative watch, despite the deal that will allow the government to meet its obligations.
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