President Joe Biden signed into law on Saturday extending the debt ceiling by two years, preventing an economically catastrophic default before Monday’s deadline.
The Fiscal Responsibility Act of 2023 suspends the government debt limit until January 1, 2025, after the 2024 presidential election.
“If we didn’t reach a budget agreement, there were extreme voices threatening to put America in default on our national debt for the first time in our 247-year history,” Biden said of the deal Friday night in his first televised address. from the Oval Office.
“Nothing, nothing could have been more irresponsible. Nothing could have been more catastrophic,” he added.
The Senate approved the bipartisan budget deal Thursday by a vote of 63 to 36. The House passed the legislation a day early by a vote of 314 to 117, with 149 Republicans joining 165 Democrats in favor of the deal brokered by Biden and House Speaker Kevin McCarthy, R-Calif., after months of political warfare over government spending.
The legislation limits spending for the next two years and includes conservative measures to recover about $28 billion in unspent Covid relief funds, as well as eliminating $1.4 billion in IRS funding and shifting about $20 billion of the $80 billion the IRS got from the inflation cut Trade to non-defense finance.
It also restarts federal student loan payments after a long hiatus that began at the start of the pandemic, and adds work requirements for people up to age 55 to receive benefits under the Supplemental Nutrition Assistance Program and temporary assistance for needy families, with exceptions for veterans and the homeless. The current threshold is 50 years old.
Biden initially refused to negotiate the debt ceiling with McCarthy, insisting that the House must pass a so-called clean bill without any cuts or policies. “I will not let anyone use the full faith and credit of the United States as a bargaining chip,” Biden said in January.
But the new Speaker of the Republican House said the House would not vote to raise the debt limit without significant cuts. Despite divisions in the Republican Party, with die-hard Republicans demanding deeper cuts and policy changes, McCarthy managed his narrow majority to pass a partisan bill in late April that would mandate spending cuts in exchange for a debt ceiling hike.
The House’s passage of that bill helped force Biden to the negotiating table, kicking off weeks of frenzied talks that culminated in a deal late last month. It came together just days before a June 5 deadline.
The Treasury Department reached its legal credit limit in January, but could use “extraordinary measures” to pay the country’s bills — to a point. Treasury Secretary Janet Yellen had warned on Monday that the country was at risk of breaching the debt ceiling.
In a May 26 letter to McCarthy, Yellen warned that “we now estimate that the Treasury will have insufficient funds to meet the government’s obligations if Congress does not increase or suspend the debt limit by June 5.”
Failing to do so, she warned, “would cause serious hardship for American families, damage our global leadership position and raise questions about our ability to defend our national security interests.”
This article was originally published on NBCNews.com