President Joe Biden has successfully signed a crucial legislation, just two days before the deadline, that raises the nation’s debt ceiling
This action prevents a catastrophic default on the federal government’s debt and its potential disastrous impact on the economy. The signing took place privately at the White House, and the announcement was made through an emailed statement by the White House, where President Biden expressed gratitude to congressional leaders for their collaboration.
Earlier, the Department of the Treasury had issued a warning that the country would face a shortage of funds to fulfill its financial obligations by Monday, a situation that would have had severe repercussions on the US and global economies. The Republicans had demanded spending cuts in exchange for raising the borrowing limit, leading to a prolonged standoff. Eventually, after weeks of intense negotiations between the White House and House Speaker Kevin McCarthy, a resolution was reached.
The final agreement, which received approval from the House on Wednesday and the Senate on Thursday, includes a suspension of the debt limit until 2025, effectively extending beyond the next presidential election. It also includes restrictions on government spending and sets budget targets for the next two years, aiming to ensure fiscal stability during the upcoming political season.
By raising the nation’s debt limit, currently standing at $31.4 trillion, the government can continue borrowing to fulfill its existing financial obligations. President Biden emphasized the criticality of passing this budget agreement, highlighting the potential catastrophic consequences of defaulting on the country’s debt. He acknowledged that while not everyone got everything they wanted, the American people received what they needed. He characterized the agreement as a compromise that averted an economic crisis and collapse.
President Biden utilized this opportunity to outline the achievements of his first term as he seeks re-election. These accomplishments include support for high-tech manufacturing, investments in infrastructure, financial incentives for combating climate change, and countering Republican attempts to roll back his agenda and achieve deeper spending cuts. He emphasized the simultaneous reduction in spending and deficits, highlighting the protection of important priorities such as Social Security, Medicare, Medicaid, veterans’ benefits, infrastructure investments, and clean energy.
While expressing a willingness to continue working with Republicans, President Biden also drew contrasts with the opposing party, particularly concerning his goal of raising taxes on the wealthy, a step he indicated might have to wait until a potential second term. He conveyed his intention to win re-election with the support of the people.
President Biden’s remarks provided the most detailed insights into the compromise and negotiations carried out by him and his staff. Throughout the high-stakes discussions, he maintained a relatively low public profile to allow both sides to reach an agreement and for lawmakers to vote on the legislation.
He commended House Speaker Kevin McCarthy and his negotiating team for their sincere efforts and thanked all congressional leaders for ensuring the swift passage of the legislation, acknowledging their prioritization of the nation’s interests over political considerations.
The 99-page bill includes spending restrictions for the next two years and introduces some policy changes. Notably, it introduces new work requirements for older Americans receiving food aid and approves an Appalachian natural gas pipeline that faces opposition from many Democrats. Certain environmental regulations have been modified to streamline approvals for infrastructure and energy projects, a move that has been long sought by moderate members of Congress.
The Congressional Budget Office estimated that 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 bolstered funds for defence and veterans, cut back some new money for the Internal Revenue Service (IRS) and rejected Biden’s call to roll back Trump-era tax breaks on corporations and the wealthy to help cover the nation’s deficits.
But the White House said the IRS’s plans to step up enforcement of tax laws for high-income earners and corporations would continue.
The agreement imposed an automatic overall 1 percent cut to spending programmes if Congress failed 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 favour, 31 Republicans along with four Democrats and one independent who caucuses with the Democrats opposed.
The vote in the House was 314-117.