Joe Biden signs debt ceiling bill that pulls US back from brink of unprecedented default

The White House announced the signing, done in private at the White House, in an emailed statement in which Biden thanked congressional leaders for their partnership

Raising the nation’s debt limit, now at US$31.4 trillion, will ensure that the government can borrow to pay debts already incurred

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US President Joe Biden addresses the nation in the Oval Office of the White House on Friday in Washington. Photo: Pool / Getty Images / TNS

Published: 2:28am, 4 Jun 2023Updated: 2:28am, 4 Jun 2023

With just two days to spare, US President Joe Biden signed legislation on Saturday that lifts the nation’s debt ceiling, averting an unprecedented default on the federal government’s debt.

The White House announced the signing, done in private at the White House, in an emailed statement in which Biden thanked congressional leaders for their partnership.

The Treasury Department had warned that the country would start running short of cash to pay all of its bills on Monday, which would have sent shock waves through the US and global economies.

House Speaker Kevin McCarthy, left, sits for debt limit talks with US President Joe Biden in the Oval Office at the White House in Washington on May 22. Photo: Reuters

Republicans refused to raise the country’s borrowing limit unless Democrats agreed to cut spending, leading to a stand-off that was not resolved until weeks of intense negotiations between the White House and House Speaker Kevin McCarthy.

The final agreement, passed by the House on Wednesday and the Senate on Thursday, suspends the debt limit until 2025 – after the next presidential election – and restricts government spending. It gives lawmakers budget targets for the next two years in hopes of assuring fiscal stability as the political season heats up.

Raising the nation’s debt limit, now at US$31.4 trillion, will ensure that the government can borrow to pay debts already incurred.

“Passing this budget agreement was critical. The stakes could not have been higher,” Biden said from the Oval Office on Friday evening. “Nothing would have been more catastrophic,” he said, than defaulting on the country’s debt.

“No one got everything they wanted but the American people got what they needed,” Biden said, highlighting the “compromise and consensus” in the deal. “We averted an economic crisis and an economic collapse.”

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