A bill that raises the debt ceiling for an additional two years has been signed into law by President Joe Biden, essentially preventing a disastrous debt default.
The national debt ceiling is suspended until January 1, 2025, following the 2024 presidential elections, thanks to the Fiscal Responsibility Act of 2023. President Biden emphasized the seriousness of the issue, stating that a budget impasse would have resulted in a national debt default—an unparalleled occurrence in American history.
The bipartisan budget agreement was approved by the Senate on a vote of 63-36 and the House on a vote of 314-117. Spending caps for the following two years are part of the legislation, which also includes conservative measures like reallocating $20 billion of the $80 billion the IRS received under the Inflation Reduction Act to nondefense spending and recovering about $28 billion in unutilized Covid relief funds.
The law also handles various other issues, like as starting up federal student loan repayments again after the pandemic’s interruption. Aside from that, certain aid programs now include job requirements for beneficiaries up to the age of 55, with exceptions for veterans and the homeless. The prior age cutoff for employment requirements was 50.
President Biden initially declined to talk with House Speaker Kevin McCarthy on raising the debt ceiling, stating that a “clean bill” without budget cutbacks or other policy provisions was required. Before voting to lift the debt ceiling, McCarthy and other Republican groups, however, requested hefty budget cutbacks. Negotiations between President Biden and Republican lawmakers eventually resulted from a political bill that tied budget cuts to increasing the debt ceiling that was eventually passed in late April. Just a few days before the deadline of June 5, these conversations came to an end.
Treasury Secretary Janet Yellen warned that the United States was in danger of exceeding the debt ceiling on June 5. The Treasury Department had been using “extraordinary measures” to pay the nation’s financial obligations since January.
Yellen emphasized the serious repercussions of not raising or suspending the debt ceiling, including hardships for American families, loss of global leadership, and uncertainty regarding the nation’s ability to defend itself.
The United States has successfully avoided a potential debt default by raising the debt ceiling. The plan, which resolves differences over federal spending, is comprehensive and represents a compromise between the Biden administration and Republican senators.