President Joe Biden signed legislation averting a US debt default, sidestepping a catastrophic blow to the economy with a bipartisan victory that defied Washington expectations.
The measure brokered with House Speaker Kevin McCarthy limits federal spending for two years and suspends the debt ceiling through the 2024 election. It cleared the House and Senate by wide margins, cementing Biden's reputation as a pragmatic dealmaker as he prepares to intensify his reelection run.
Biden signed the bill behind closed doors without a ceremony. A White House statement Saturday announcing the signing thanked congressional leaders, including McCarthy and Senate Republican leader Mitch McConnell, "for their partnership."
The president touted the accord Friday evening in his first Oval Office address as a prime example of his ability to work across the aisle, even with the nation deeply divided.
"The only way American democracy can function is through compromise and consensus, and that's what I worked to do as your president," he said, adding that in times when "the American economy and the world economy is at risk of collapsing, there is no other way."
The Senate passed the legislation late Thursday, a day after the House approved it. Lawmakers faced a Monday deadline to avoid triggering a first-ever U.S. payments default.
The possibility of a recession caused by a default posed one of the biggest threats to Biden's chances of winning a second term. The 80-year-old president, who has faced questions about his age and fitness for office, neutralized it by negotiating a bipartisan agreement that passed through a bitterly divided Congress.
Market Relief
Yields on Treasury bills maturing in early June — when Treasury Secretary Janet Yellen has said her department risks running out of cash — tumbled Friday with rates on some issues dropping below 5%. The cost of insuring U.S. sovereign debt against default via derivatives has tumbled.
At one point this month, it exceeded levels on the bonds of many emerging markets with credit ratings well below that of the world's biggest economy
The debt-limit and budget bill was the product of weeks of negotiations between Biden, McCarthy and their deputies. The president personally appealed to lawmakers to vote for the deal, and large majorities of Democrats in the House and Senate supported it.
Still, the final product left dozens of lawmakers on the left opposing the agreement due to the inclusion of new work requirements for people on federal benefits, easing of energy-project permitting and spending curbs.
Other members who voted for it did so reluctantly. That dynamic could pose a challenge for a president with low approval ratings and a less-than-enthusiastic base.
McCarthy perhaps faced even more political peril than Biden, negotiating with the threat that far-right Republicans who tried to block his speakership in January could try to unseat him if they did not like the deal's terms.
