WASHINGTON (AP) – President Joe Biden is expected to sign legislation Saturday raising the debt ceiling, bypassing Monday’s deadline when the Treasury Department warned the United States was running out of cash to pay all bills.
The bipartisan measure, passed by the House of Representatives on Wednesday and the Senate on Thursday, averts the possibility of an unprecedented national bankruptcy that would have rocked the US and world economy. Raising the country’s debt limit, which currently stands at $31.4 trillion, will ensure the government can borrow to pay off debts already incurred.
“The passage of this budget agreement was crucial. The stakes couldn’t have been higher,” Biden said Friday night in the Oval Office. “Nothing could have been more catastrophic,” he said, than being unable to service the country’s debt.
The deal was brokered by Biden and House Speaker Kevin McCarthy. She grants Republicans some of their requested federal spending cuts, but sticks to top Democrat priorities. It raises the debt ceiling until 2025 – after the 2024 presidential election – and gives lawmakers fiscal targets for the next two years in hopes of ensuring fiscal stability as the political season heats up.
“No one got everything they wanted, but the American people got what they needed,” Biden said, emphasizing the “compromise and consensus” in the deal. “We averted an economic crisis and collapse.”
Biden took the opportunity to list achievements from his first term as part of his re-election, including support for high-tech manufacturing, infrastructure investments and financial stimulus to combat climate change. He also highlighted how he had softened Republican efforts to roll back his agenda and push through deeper cuts.
“We’re cutting spending while also cutting deficits,” Biden said. “We’re protecting key priorities from Social Security to Medicare and Medicaid to veterans and our transformative investments in infrastructure and clean energy.”
While pledging to continue working with Republicans, Biden also provided contrasts with the opposing party, particularly when it came to raising taxes on the wealthy, something the Democratic president had been striving for.
He suggested that that might have to wait until a second term.
“I’ll be back,” he said. “With your help, I will win.”
Biden’s remarks were the Democratic president’s most detailed comments on the compromise he and his staff negotiated. He largely remained silent in public during the high-risk negotiations, a decision that frustrated some members of his party but was intended to give both sides a chance to reach an agreement and give lawmakers a chance to agree with him.
Biden commended McCarthy and his negotiators for acting in good faith and all congressional leaders for ensuring the law passed quickly. “They acted responsibly and put the country’s well-being ahead of politics,” he said.
Overall, the 99-page bill limits spending for the next two years and changes some policies, including introducing new job requirements for older Americans who receive food aid and approving a natural gas pipeline in Appalachia, which many Democrats oppose. Some environmental regulations have been changed to simplify permitting for infrastructure and energy projects, a move that moderates in Congress have long sought.
The Congressional Budget Office reckons it could actually expand overall eligibility for federal food assistance by removing work requirements for veterans, the homeless and young people leaving foster care.
The bill also increases funding for defense and veterans, cuts some new funding for the Internal Revenue Service, and rejects Biden’s call to roll back Trump-era tax breaks for corporations and the wealthy to help cover the country’s deficits. However, the White House said the IRS’s plans to increase enforcement of tax laws for high earners and businesses would continue.
The deal mandates an automatic 1% overall cut in spending programs if Congress fails to approve its annual spending bills — a measure aimed at pressuring lawmakers from both parties to reach a consensus before the fiscal year ends in September.
More Democrats supported the bill than Republicans in both chambers, but both parties were critical of its passage. In the Senate the balance was 63 to 36, with 46 Democrats and Independents and 17 Republicans in favor, 31 Republicans plus four Democrats and one Independent standing with opposing Democrats.
The vote in the House of Representatives was 314 to 117.
AP Congressional Correspondent Lisa Mascaro contributed to this report.