The US President is set to sign into law a bipartisan agreement to lift the government’s borrowing limit, averting ‘crisis’.
“When I ran for president, I was told the days of bipartisanship were over, and that Democrats and Republicans can no longer work together,” Biden said in his speech on Friday. “But I refused to believe that.”
The speech was a victory lap for the Democratic Biden, who collaborated with Kevin McCarthy – the Republican speaker of the House of Representatives and his vocal critic – to forge the debt-ceiling bill last month.
The bill’s passage through the Senate on Thursday all but assures that the US will not default on its loans. The country had been rapidly approaching a June 5 deadline, set by the US Treasury, at which time the federal government would have likely run out of funds to pay off its debts.
The bill had previously passed the House of Representatives on Wednesday by a margin of 314 to 117.
“Passing this budget agreement was critical. The stakes could not have been higher,” Biden explained in his address.
If we had failed to reach an agreement on the budget, there were extreme voices threatening to take America – for the first time in our 247-year history – into default on our national debt. Nothing, nothing would have been more irresponsible. Nothing would have been more catastrophic.”
Had the US hit its $31.4 trillion debt ceiling – the limit for the federal government’s borrowing powers – experts predicted that the economic fallout could trigger a recession.
The US would have likely seen its credit rating fall and its interest rates increase, and businesses and individuals dependent on government funds might have seen their payments paused. The White House estimated a default could have cost 8 million Americans their jobs.
Still, the path to Thursday’s 63-36 Senate vote was fraught with controversy. Far-right Republicans blasted the bill for not imposing steep-enough cuts to discretionary government spending – and for failing to offer an adequate boost to defence funds.
Meanwhile, members of the Democratic party bemoaned the spending caps anticipated to affect social safety net initiatives, as well as heightened work requirements for the Supplemental Nutrition Assistance Program (SNAP) and Temporary Assistance for Needy Families (TANF).
“No one got everything they wanted. But the American people got what they needed,” Biden said on Friday, addressing the criticisms. “We averted an economic crisis and economic collapse.”
For his part, McCarthy has called Congress’s passage of the debt-ceiling bill a “vote for the largest savings in American history”. Among its provisions were terms to claw back funding from the Internal Revenue Service, the US’s tax-collecting body, as well as unspent COVID relief money.
The 99-page bill will suspend the debt ceiling through 2025, allowing the government to spend what it needs to cover its costs until then.
Biden has announced he plans to sign the bill on Saturday, two days before the June 5 deadline.