The President Joe Biden signed a bill on Saturday that extends the debt ceiling by two years. This prevented an economic disaster due to a debt default before Monday’s deadline.
After the 2024 presidential election, the Fiscal Responsibility Act of 2020 suspends the limit on public debt until January 1, 2025.
Biden, in his first address televised from the Oval Office, said that if we failed to reach an accord on the budget there were voices of extremes threatening to bring America into default for the first 247 years in its history on our national debt.
“Nothing would have been more irresponsible.” “Nothing could have been more disastrous,” he said.
The Senate approved the b budget deal on Thursday by a vote of 63-36. The House had passed the legislation by 314 to 117 a day before. 149 Republicans joined 165 Democrats who were in favor of this agreement, which was mediated by Biden and House speaker Kevin McCarthy, R. California, after months’ worth of political battles over government spending.
The legislation limits spending for the next 2 years, and includes conservative measures that will claw back approximately $28 billion of unspent Covid funds. It also eliminates $1.4 billion from IRS funding and shifts roughly $20 billion $80 Billionthe IRS received through the Inflation Reduction Act towards nondefense funding.
President Joe Biden addresses the nation from the Oval Office, on June 2, 2023.
Jim Watson / AFP – Getty Images
The bill also restarts federal loan payments following a long pause that began with the outbreak of the pandemic. It also adds requirements for work to people under 55 years old to receive benefits from the Supplemental Food Assistance Program and Temporary Aid for Needy Families. There are exceptions for homeless people and veterans. The current age threshold is 50.
Biden initially declined to negotiate with McCarthy over the debt limit, insisting the House must pass a “clean bill” without any policy or spending provisions. Biden stated in January that he would not allow anyone to use the full faith of the United States and its credit as a bargaining tool.
The new Republican House Speaker said that the House would not vote to increase the debt ceiling without significant budget reductions. McCarthy, despite divided factions within the GOP and hardline Republicans who demanded deeper spending cuts, was able wrangle a narrow majority in order to pass the partisan bill that would impose a budget cut in exchange for raising debt ceiling.
The passage of this bill in the House forced Biden to negotiate, resulting in weeks of frenetic talks that culminated at the end of last month. The deal was reached just a few days before the June 5 deadline.
Treasury Department reached its statutory borrowing limits in early January, but it was still able to take “extraordinary measures” for the payment of bills. Treasury Secretary Janet Yellen warned on Monday that the country could breach the debt ceiling.
Yellen wrote to McCarthy in a letter dated May 26, warning that, “we estimate that Treasury won’t have enough resources to meet the obligations of the government if Congress doesn’t raise or suspend the debt ceiling by June 5,.”
She warned that failure to do so “would cause severe hardship for American families, harm to our global leadership position and raise questions about the ability to defend our National Security interests.”
Contributors were Molly Roecker and Zoe Richards.
