US President Joe Biden on Saturday signed a debt ceiling bill passed by Congress after weeks of bickering to prevent catastrophic self-inflicted bankruptcy in the world’s largest economy.
The Fiscal Responsibility Act of 2023 authorizes the government to extend the so-called debt ceiling to renew loans and keep the bills paid. The Treasury Department had warned that if the debt ceiling were blocked after Monday, the country would be unable to pay its $31 trillion debt.
Bankruptcy would likely have led to market panic, massive job losses and a recession, with global repercussions.
In a statement on Saturday, the White House thanked Republican and Democratic leaders in Congress “for working together.”
In a rare Oval Office speech late Friday, Biden said the debt ceiling bill saved the country from an “economic collapse.”
Speaking from behind the historic Resolute Desk on live primetime television, Biden said the deal to resolve the deadlock between Democrats and Republicans was a compromise where “no one got everything they wanted.”
“However, we averted an economic crisis,” he said.
Oval Office addresses have always been reserved by presidents for moments of unique national danger or importance.
Biden took the opportunity to deliver a reassuring, calm tone. He sprinkled his speech with chuckles and a smile, praised his opponents for negotiating in good faith, and promised the Americans that he had never felt so optimistic.
Biden said Congress has now retained “the full confidence and honor of the United States.”
But even as the House and Senate brushed aside disagreements to finally pass the deal last week, the reputation of the US economy took a blow.
Rating agency Fitch said Friday it is negatively eyeing the United States’ “AAA” rating despite the deal.
– Reaching out to opponents –
The debt ceiling is usually an undisputed accounting maneuver passed annually by Congress. It allows the government to keep borrowing money to pay bills already incurred.
This year, hard-right Republicans who dominated their party’s slim majority in the House of Representatives decided to use the must-pass vote as leverage to force Biden to accept cuts in many Democratic spending priorities.
This set off a test of political strength that threatened to end in chaos before the two sides agreed this week to raise the debt ceiling and freeze some budget spending in return – but Republican demands for austerity were not met .
Kevin McCarthy, the speaker of the Republican-led House, had touted the compromise bill as a major victory for the conservatives, although he faced backlash from hardliners on the right who said he was making too many concessions.
But Biden, who is campaigning for re-election in 2024, sees the dramatic resolution of the crisis as a victory, demonstrating his negotiating powers and his pitch to be the moderate voice in an increasingly extreme political landscape.
He polished those credentials in the speech by going out of his way to praise McCarthy, a politician long loyal to former President Donald Trump — the man who defeated Biden in 2020 and who is looking to make his own return in 2024.
“I want to commend speaker McCarthy. You know, him and I, us and our teams got along, got things done,” Biden said.
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