4th June 2023 – (Washington) On Saturday, President Joe Biden signed legislation lifting the nation’s debt ceiling just two days before the Treasury Department warned that the country would start running short of cash to pay its bills. The lifting of the debt ceiling averted and delayed an unprecedented default on the federal government’s debt. The White House announced the signing, which was done in private at the White House, in an emailed statement in which Biden thanked congressional leaders for their partnership.
The impasse over the debt ceiling arose as Republicans refused to raise the country’s borrowing limit unless Democrats agreed to cut spending. Weeks of intense negotiations between the White House and House Speaker Kevin McCarthy finally led to a resolution.
The final agreement, passed by the House on Wednesday and the Senate on Thursday, suspends the debt limit until 1st January, 2025, after the next presidential election, and restricts government spending. It gives lawmakers budget targets for the next two years to ensure 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. Biden called the deal a “compromise and consensus” and said that “no one got everything they wanted but the American people got what they needed.” He added, “We averted an economic crisis and an economic collapse.”
Biden also used the opportunity to highlight the achievements of his first term, including support for high-tech manufacturing, infrastructure investments, and financial incentives for fighting climate change. He also emphasized ways he blunted Republican efforts to roll back his agenda and achieve deeper cuts.
Even as he pledged to continue working with Republicans, Biden drew contrasts with the opposing party, particularly when it comes to raising taxes on the wealthy, something the Democratic president has sought. He suggested that it may need to wait until a second term, saying, “I’m going to be coming back. With your help, I’m going to win.”
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. However, 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, with 31 Republicans along with four Democrats and one independent who caucuses with the Democrats opposed. The vote in the House was 314-117.