President Joe Biden on Saturday signed into law a bill extending the debt ceiling for two years, averting an economically disastrous default by Monday’s deadline.
The 2023 Fiscal Responsibility Act suspends the public debt ceiling until January 1, 2025, after the 2024 presidential elections.
“If we had failed to reach an agreement on the budget, there were extreme voices threatening to put America, for the first time in 247 years of history, in default on our national debt,” said Biden said of the deal Friday night in his first televised address from the Oval Office.
“Nothing, nothing would have been more irresponsible. Nothing would have been more catastrophic,” he added.
The Senate passed the bipartisan budget deal in a 63-36 vote on Thursday. The House passed the legislation a day early by a 314-117 vote, 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 caps spending for the next two years and includes conservative measures to recover about $28 billion in unspent Covid relief funds, as well as eliminate $1.4 billion in IRS funding and move about 20 billion out of the $80 billion the IRS got from cutting inflation. Non-Defense Funding Act.
It also restarts federal student loan payments after a long pause that began at the start of the pandemic, and adds work requirements for people up to age 55 to get benefits under the Supplemental Nutrition Assistance Program. and temporary assistance for families in need, with exclusions for veterans and the homeless. The current threshold is 50 years.
Biden initially refused to negotiate with McCarthy on the debt ceiling, insisting the House must pass a so-called clean bill without any spending cuts or policy provisions. “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 Republican House speaker said the House would not vote to raise the debt ceiling without major budget cuts. Despite split factions within the GOP, with hardline Republicans demanding deeper spending cuts and policy changes, McCarthy was able to contest his slim majority to pass a partisan bill in late April that would impose budget cuts in return. an increase in the debt ceiling.
The House’s passage of that bill helped force Biden to the negotiating table, sparking weeks of frantic talks that culminated in a deal late last month. It met just days before the June 5 deadline.
The Treasury Department reached its statutory borrowing limit in January, but was able to use “extraordinary measures” to pay the country’s bills – up to a point. Treasury Secretary Janet Yellen had warned the country was at risk of breaching the debt ceiling on Monday.
In a May 26 letter to McCarthy, Yellen warned that “we now estimate that the Treasury will not have sufficient resources to meet the government’s obligations if Congress has not raised or suspended the debt ceiling of here on June 5”.
Failure to do so, she warned, “would cause serious hardship for American families, damage our position as a global leader and raise questions about our ability to defend our national security interests.”
This article originally appeared on NBCNews.com