President Joe Biden signed legislation into law Saturday that raises the US debt ceiling to 2025, avoiding an unprecedented default on the federal government’s debt, with just two days to spare until the United States will not he would have had cash in his coffers to pay his obligations.
“We are going to continue the work of building the strongest economy in the world,” the president wrote in a tweet, accompanied by a video of him signing the agreement in the Oval Office.
With the ratification of the bipartisan agreement reached in Congress to raise the debt ceiling, the country will avoid the suspension of payments that would have occurred as soon as Monday had Congress not reached an agreement to raise the debt ceiling, which it sets the limit on how much money the US can borrow and can only be raised or stopped by legislative action.
The Treasury Department had warned that the country would start running out of cash on Monday, which would have shocked the US and global economies.
In an address to the nation last night, the president noted that the default “would have been catastrophic” and would have sent the country into “a recession.”
The agreement to raise the debt ceiling in exchange for some ceilings on public spending was reached last weekend, in a negotiation against time between the White House and the Republicans in the Lower House, led by Kevin McCarthy.
The measure suspends the debt ceiling for the next two years, until after the November 2024 presidential elections. Specifically, it suspends the current debt limit of $31.4 trillion dollars until January 1, 2025.
In exchange, the agreement reached over the weekend between the White House and the Republicans in the Lower House contemplates, among other things, caps on spending on federal programs financed by Congress in areas such as health, education, justice or the environmental protection.
In parallel, it cuts part of the new funds to reallocate them to items other than defense and contemplates the resumption of payments by university students for the debt they have accumulated.
Under that pact, non-defense spending will stay the same in fiscal year 2024 and increase 1% in fiscal year 2025.
Likewise, it tightens the work requirements to access social benefits, such as food stamps, and rescinds $28,000 million unspent dollars that had been assigned to aid programs in the face of the Covid pandemic.
The approval of the agreement in Congress and the subsequent signing of the president was crucial so that the country did not default on its public debt, after the debt ceiling was reached last January, the legal limit to the money that the United States. The US can borrow to meet its commitments.
Keep reading:
– Kevin McCarthy defends debt ceiling deal despite criticism from radical Republicans
– Biden acknowledged concessions in a debt ceiling deal, but maintains “key priorities”
– Debt ceiling: The Treasury extends the term to run out of cash to pay until June 5