US President Joe Biden on Saturday signed the debt ceiling bill into law, aimed at preventing a potential default crisis.
“I just signed into law a bipartisan budget agreement that prevents a first-ever default while reducing the deficit, safeguarding Social Security, Medicare, and Medicaid, and fulfilling our scared obligation to our veterans,” Biden said on Twitter.
The decision to raise the debt limit ensures that the federal government avoids the risk of running short on cash and facing the serious consequences of defaulting on its obligations.
Without congressional action to raise or suspend the debt limit by next week, the Treasury could face a shortage of resources, making it challenging or impossible to meet its financial commitments.
However, negotiations at the end of May led to an agreement on the debt limit, culminating in the introduction of the Financial Responsibility Bill to Congress.
The bill got overwhelming support in the House of Representatives, passing by a 314-117 vote.
The Senate voted 63-36 to approve the legislation.
The bill suspends the $31.4 trillion cap on the federal government’s borrowing limit through January 2025 – notably, past the next US presidential and congressional elections.
The debt limit was hit in January, after which the Treasury Department took steps to ensure that the US continued to pay its bills, but next week, those accounting tricks were due to run short.