WASHINGTON: US President Joe Biden has signed into law the “Fiscal Responsibility Act of 2023,” effectively suspending the nation’s debt ceiling and preventing a catastrophic default, the White House announced on Saturday.
After weeks of intense negotiations and legislative wrangling, Congress successfully passed the bill, which allows the government to continue borrowing and ensures the payment of bills. The signing of this legislation averts the risk of a default that could have led to market panic, massive job losses, and a severe recession with far-reaching global implications.
By raising the debt ceiling, the United States avoids the unprecedented scenario of being unable to meet its financial obligations. Failure to raise the debt ceiling would have forced the government to default on its debts, negatively impacting the nation’s credit rating and undermining investor confidence.
Biden Says Raising Borrowing Limit Averts Economic Collapse
Earlier, Biden has said that raising the country’s borrowing limit averted “economic collapse”, as he delivered his first Oval Office address to the nation.
He pledged to sign the bill into law today (Saturday) after it sailed through Congress with bipartisan support. The US president voiced rare praise for his Republican counterparts, saying they “operated in good faith”.
He said a United States default on its $31.4tn debt by Monday’s deadline would have been “catastrophic”. Speeches to the nation from the Oval Office are typically reserved for major crises, such as war or natural disasters.
The White House said Biden’s decision to make his remarks at the Oval Office underscored the gravity of the situation if the debt ceiling had not been raised at the last minute. For weeks, the White House and Republicans debated the details of a deal, and there was skepticism about whether the package would be finalised before the United States government ran out of money on June 5 (Monday).
The bill passed 63-36 in the Senate on Thursday night, a day after it quickly cleared the House of Representatives.
The president praised congressional leaders, including Republican Speaker of the House Kevin McCarthy and Republican Senate leader Mitch McConnell.
“They acted responsibly and put the good of the country ahead of politics,” said Biden, who is running for re-election in 2024.
The deal suspends the debt limit until January 1 2025 and caps non-defence spending while expanding work requirements for food and healthcare assistance, amongst other provisions.
Total funding for the medical care of military veterans would also increase, in line with what President Biden had sought.
The legislation will result in $1.5tn in savings over a decade, the independent Congressional Budget Office said on Tuesday.
Though it was primarily a bipartisan bill, there were Republicans who said the deal didn’t go far enough with cuts, while some Democrats said it went too far.
