President Biden signed into law the Fiscal Responsibility Act of 2023 on Saturday, temporarily ending the threat of economic disaster from defaulting on the national debt and placing caps on spending for two years.
The White House issued a statement saying Mr Biden signed the legislation days after it passed the House and Senate after weeks of sometimes acrimonious negotiations with Republicans.
Mr Biden’s signature came just two days before the so-called X date, when Janet L. Yellen, the Treasury Secretary, had said the government would run out of money to pay its debts. Economists had predicted that the resulting collapse in confidence in America’s financial promises would lead to economic instability around the world in that event.
To avoid that, the legislation signed by Biden suspends the country’s debt ceiling, allowing the government to borrow what it needs to meet its obligations. In remarks to the nation on Friday night, Mr Biden said it had been crucial for Republicans and Democrats to find a way to reach an accommodation.
“Nothing—nothing would have been more irresponsible. Nothing could have been more catastrophic,” Biden said of a default in his first prime-time Oval Office address as president. A little later, he added that such an outcome would have meant “America’s position as the most trusted, reliable financial partner in the world would have been destroyed.”
“So it was critical to get an agreement,” he said.
Negotiations to reach that deal seemed unlikely to succeed at times, given the deep ideological differences between the Biden White House and the Republicans, who control the House and have nearly equal numbers of members in the Senate.
House Republicans, led by Speaker Kevin McCarthy, had demanded major cuts in Mr Biden’s priorities in exchange for the deal to raise the debt ceiling. The president was initially hesitant to negotiate, insisting that the Republicans raise the debt ceiling without conditions, as members of both parties had done in the past.
Those positions — which the two sides maintained for months this year — were finally broken down several weeks ago when Mr. Biden agreed to begin talks with Mr. McCarthy, a Republican from California.
After a deal was finally reached, both men declared victory, each saying that he had won important concessions from his opponent.
Mr. McCarthy characterized the deal as “a major win” and a major step toward necessary government spending cuts, which the Congressional Budget Office estimated would be saved by about $1.5 trillion over the next decade. lowered.
“We’re finally bending the discretionary spending curve because of this bill, and we’re doing it while simultaneously increasing our national defense and our veterans fully funded, while preserving Social Security and Medicare,” Mr. McCarthy said in a speech at the House- floor after the bill was passed.
At the same time, Mr. Biden and his aides described the deal as a success as the White House pushed back more draconian cuts that Republicans had initially proposed. They said Mr Biden’s agenda remained largely untouched even as Republicans agreed to raise the debt ceiling – something many in the party had vowed not to do.
Since the announcement of the deal, there has been some grumbling on both sides. Some conservative Republicans voted against the measure in the House, saying it didn’t cut enough. Some Democrats opposed it because it imposed new job requirements on some adults who received food stamps and gave the green light to a natural gas pipeline that environmentalists opposed.
But Mr Biden said in his speech on Friday that the final agreement was what each side could have expected in a divided government.
“Nobody got everything they wanted, but the American people got what they needed,” he said. He added, praising Mr McCarthy: “We were able to get along and get things done. We were honest with each other, completely honest with each other, respectful of each other. Both parties acted in good faith. Both parties kept their word.”