Biden Ready to Sign Bill Increasing Debt Ceiling, Avoiding Potential Federal Default

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President Joe Biden is anticipated to sign a bill on Saturday, increasing the debt ceiling and preventing an upcoming Monday deadline, which the Treasury cautioned could leave the United States without sufficient funds to pay its obligations. This bipartisan initiative, which got approval from the House on Wednesday and the Senate on Thursday, wards off the risk of an unprecedented government default that could have sent shockwaves through both U.S. and global economies. With the current national debt limit at $31.4 trillion, this increase will ensure the government has the borrowing capacity to meet pre-existing debts.

“Approving this budget agreement was crucial. The consequences otherwise could have been disastrous,” stated Biden from the Oval Office on Friday evening. “A default on our national debt would have had devastating effects,” he continued. The agreement, brokered by Biden and House Speaker Kevin McCarthy, secured some spending cuts requested by Republicans while safeguarding significant Democratic objectives. It extends the debt limit till 2025, post the 2024 presidential elections, and sets budget goals for the coming two years to promote fiscal stability during the election season.

“Although no one achieved all their objectives, the American people received what was necessary,” Biden noted, emphasizing the spirit of “compromise and consensus” inherent in the deal. “We successfully prevented an economic crisis and collapse.” During his address, Biden used the opportunity to highlight his administration’s achievements during his first term as he seeks re-election. These included backing high-tech manufacturing, infrastructure spending, and financial incentives to combat climate change, along with efforts to counteract Republican attempts to undermine his agenda and seek deeper cuts.

“Simultaneously, we’re reducing spending and lowering deficits,” Biden declared. “We’re safeguarding critical programs, from Social Security to Medicare to Medicaid to Veterans services, in addition to our transformative investments in infrastructure and renewable energy.” Despite his commitment to continued cooperation with Republicans, Biden also pointed out differences between his party and theirs, particularly concerning tax increases for the affluent – an issue he has campaigned for and may carry over into his second term.

Biden’s detailed comments on the compromise, negotiated by him and his staff, were the most extensive yet. Throughout the intense negotiation period, he remained mostly silent in public, a choice that some party members found perplexing but was designed to provide room for all sides to reach an agreement and for the bill to be presented to him.

Biden commended McCarthy and his negotiation team for their good faith efforts and praised all congressional leaders for their role in the speedy passage of the legislation. “They acted responsibly and prioritized the country’s interest over politics,” he stated. The comprehensive 99-page bill outlines spending restrictions for the next two years and introduces policy alterations, including new work requirements for older Americans receiving food aid and approval for a disputed natural gas pipeline in Appalachia.

The Congressional Budget Office predicts the bill may actually widen eligibility for federal food assistance, following the removal of work requirements for veterans, the homeless, and youth transitioning from foster care. The bill also increases funding for defense and veterans, reduces some additional funds for the Internal Revenue Service (IRS), and dismisses Biden’s proposal to repeal Trump-era tax breaks for corporations and the wealthy. However, the IRS will continue its enforcement of tax laws for high earners and corporations.

The bill introduces a 1% across-the-board cut to spending programs if Congress does not pass its annual spending bills — a precaution to encourage lawmakers from both sides to reach consensus before the end of the fiscal year in September. The bill was backed by more Democrats than Republicans in both chambers, but both parties played a vital role in its passage. In the Senate, the vote was 63-36, with 46 Democrats and independents and 17 Republicans in favor, while 31 Republicans along with four Democrats and one independent who aligns with Democrats opposed. The House vote was 314-117.

Lisa Mascaro, AP Congressional Correspondent, contributed to this report.

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