In his inaugural Oval Office address to the nation, President Joe Biden celebrated the bipartisan efforts of Congress in successfully averting a debt limit crisis.
President Biden took a modest victory lap on Friday, marking the resolution of a months-long impasse-turned-crisis regarding the debt limit while emphasizing the bipartisan nature of the solution.
He stressed the challenges of achieving bipartisanship and unity but underscored the necessity of continuing these efforts, especially in critical moments like the recent one where the American and global economies were at risk. Biden mentioned his unity-focused inaugural address in this context.
The bill, which passed both the House and Senate, will extend the debt ceiling until January 1, 2025, just days before the Treasury Department’s projected date when the U.S. would run out of funds to meet its obligations. President Biden expected to sign the bill on Saturday.
The deal between President Biden and House Speaker Kevin McCarthy was reached a few days earlier and involved raising the debt ceiling while implementing spending caps, resolving a prolonged standoff.
Initially, the White House had resisted negotiating with Republicans, but mounting pressure from a House-passed bill to raise the debt ceiling, coupled with the Treasury Department’s urgency, brought Biden to the negotiation table. On Saturday, the two leaders announced their agreement.
While the deal allowed both leaders to save face and averted a costly default, Biden acknowledged that no one got everything they wanted, but he emphasized that the American people received what they needed.
President Biden also acknowledged that some Republicans wanted more concessions. Through these negotiations, he managed to preserve most of his legislative achievements while securing a significant victory by postponing another debt ceiling debate until after the 2024 election.
Apart from raising the debt limit, the Fiscal Responsibility Act is expected to reduce the deficit by $1.5 trillion over the next decade, as estimated by the Congressional Budget Office.
It maintains nondefense spending at similar levels in the 2024 budget, with a 1% increase in 2025. The legislation also reallocates some IRS funding, reclaims unspent coronavirus relief funds, and reinstates student loan repayments during the summer.
It introduces expanded work requirements for select federal aid programs and streamlines the permitting process for energy projects.
Negotiations faced challenges, particularly regarding work requirements, which deterred some Democrats from supporting the legislation. On the other side of the aisle, several Republicans believed that the cuts weren’t substantial enough, and they expressed concerns about defense spending.
In the Senate, some defense-focused senators threatened to disrupt the bill’s passage before the default deadline. However, the upper chamber swiftly approved the debt ceiling bill, voting 63-36 after considering nearly a dozen amendments.
A day earlier, the House overwhelmingly supported the legislation in a 314-117 vote, despite vocal opposition from the right-wing of the Republican conference. More Democrats than Republicans ultimately backed the measure, though McCarthy still managed to secure the majority of Republican support.
For Speaker McCarthy, the debt ceiling ordeal presented a significant test. He emerged victorious and, as of now, unscathed, despite earlier concerns about his position within the Republican conference.
There had been questions for weeks about whether the California Republican could navigate the challenges of raising the debt ceiling while retaining his leadership position, especially in light of demands from far-right members of his conference who gained influence during the January speakership battle.
McCarthy’s position appeared precarious, given the concession allowing one lawmaker to call for a vote on the speaker’s removal. However, thus far, McCarthy seems to have maintained his position.
President Biden commended McCarthy on Friday, highlighting the good faith efforts and commitment from both sides to find common ground.
Ultimately, the debt limit showdown demonstrated that the two leaders could reach consensus, compelling their respective sides to work together in a bipartisan manner during a critical juncture.