Biden signs bill to lift debt ceiling and avert unprecedented bankruptcy

President Joe Biden on Saturday signed a bill that lifts the US government’s $31.4 trillion debt ceiling, preventing what would have been a first-ever bankruptcy.

The House of Representatives and Senate passed the legislation this week after Biden and House Speaker Kevin McCarthy reached an agreement after months of tense negotiations.

The Treasury Department had warned it would not be able to pay all of its bills on Monday if Congress did not act by then, which would have led to an unprecedented bankruptcy.

The White House released a 10-second video clip of Biden signing the bill in the Oval Office, but chose to avoid the kind of public ceremony that often accompanies the signing of hard-won measures.

Republicans had refused to raise the country’s borrowing limit unless Democrats agreed to cut spending, leading to a deadlock that was only resolved after weeks of intense negotiations between the White House and McCarthy.

The final deal, passed by the House on Wednesday and the Senate on Thursday, suspends the debt limit until 2025 — after the next presidential election — and caps government spending.

It gives lawmakers budget targets for the next two years in hopes of ensuring fiscal stability as the political season heats up.

Raising the country’s debt limit, now at $31.4 trillion, will allow the government to borrow to pay off debts already incurred.

“It was crucial to approve this budget agreement. The stakes couldn’t have been higher,” Biden said in an Oval Office speech Friday night. “Nothing would have been more catastrophic,” he said, than failing to pay the country’s debt.

“Nobody got everything they wanted, but the American people got what they needed,” Biden said, pointing to the “compromise and consensus” in the deal. “We have averted economic crisis and economic collapse.”

“Our economy would have gone into recession,” Biden said in a low voice.

He also used the address to pledge to crack down on “tax evaders” and raise taxes on the wealthy, even after Republican negotiators rejected his revenue proposals as a way to pay for spending cuts under the deal.

“We also need to generate revenue to tackle tax fraud and make sure everyone pays their fair share,” Biden said.

He reiterated his promise not to raise taxes for people earning more than $400,000 a year, and defended an increase in funds for IRS audits and technology — even though the debt deal was in fact an $80 billion infusion of about $20 billion. billion reduction.

He also called for closing “tax loopholes for big oil companies, crypto traders, hedge fund billionaires, saving taxpayers billions of dollars.”

Republicans defended each of these special interest loopholes. Each. But I will come back with your help. I’m going to win,” he vowed — although, to become law, the legislation must come from the Republican-dominated House.

Biden also took the opportunity to detail the accomplishments of his first term as he runs for re-election, including support for high-tech manufacturing, infrastructure investment and financial incentives to fight climate change. He also highlighted how he blunted Republican efforts to reverse his agenda and push for deeper budget cuts.

“We are cutting spending while reducing deficits at the same time,” Biden said. “We’re protecting key priorities, from Social Security to Medicare to Medicaid to veterans to our transformational investments in infrastructure and clean energy.”

Biden’s remarks were the Democratic president’s most detailed comments on the compromise he and his staff negotiated.

He remained largely silent publicly during the high-stakes talks, a decision that frustrated some members of his party but was intended to give both sides room to reach an agreement and for lawmakers to vote it on at his desk.

Biden praised McCarthy and his negotiators for acting in good faith, and all congressional leaders for ensuring the legislation passed quickly. “They acted responsibly and put the welfare of the country before politics,” he said.

Overall, the 99-page bill limits spending for the next two years and changes a number of policies, including imposing new job requirements for older Americans receiving food aid and giving the green light to a natural gas pipeline in the Appalachians that many Democrats oppose. are.

Some environmental regulations were changed to help streamline approvals for infrastructure and energy projects — a move that moderates in Congress have long sought.

The Congressional Budget Office estimates it could actually expand overall eligibility for federal food aid, by eliminating job requirements for veterans, the homeless and youth leaving foster care.

The legislation also supports defense and veterans funds, cuts some new money for the Internal Revenue Service and rejects Biden’s call to reverse Trump-era tax breaks for corporations and the wealthy to help cover the country’s deficits .

But the White House said the IRS’s plans to step up enforcement of tax laws for high-income individuals and businesses will continue.

The agreement imposes an automatic 1% blanket cut on spending programs if Congress fails to pass its annual bills — a measure designed to pressure lawmakers from both parties to reach a deal before the end of the fiscal year in September .

More Democrats than Republicans supported the legislation in both chambers, but both parties were critical of its passage.

In the Senate, the count was 63-36, including 46 Democrats and independents and 17 Republicans in favour, 31 Republicans along with four Democrats and an independent who consults with the Democrats against.

The vote in the House was 314-117.

Developing story, more to come.