Biden Signs Bill to Raise Debt Limit Into Law, Averting Default

President Joe Biden signed the bipartisan bill to raise the debt ceiling into law on Saturday, avoiding a catastrophic default that could have resulted in economic turmoil. 

The bill was sent to Biden’s desk after the Senate passed the legislation Thursday night, despite some debate over defense spending levels ahead of the vote. The House previously passed the deal on Wednesday evening.

"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 tweeted. "Now, we continue the work of building the strongest economy in the world."

The measure lifts the debt limit through the end of 2024, imposes two-year spending caps, and enacts new work requirements for some government aid programs. It also claws back previously authorized IRS funding and unspent pandemic aid. 

Over the past several weeks, the White House, House Speaker Kevin McCarthy (R-Calif.) and other top lawmakers scrambled to reach an agreement to raise the debt ceiling before the government was anticipated to run out of money to pay its bills.

The Treasury Department warned that the government could default without a debt limit increase by June 5.

Democrats say the deal will help bolster Biden, who campaigned on restoring bipartisanship in Washington, ahead of his reelection bid. 

Biden first huddled with the top four congressional leaders on May 9, more than a week after Treasury Secretary Janet Yellen first warned of a potential default in early June. 

A week later, the leaders met again and assigned lead negotiators for each party to find a deal. The White House tapped counselor Steve Richetti, budget director Shalanda Young and legislative affairs director Louisa Terrell to work with House Speaker Kevin McCarthy’s staff and Reps. Garret Graves (R-La.) and Patrick McHenry (R-N.C.).

Negotiators began meeting in person, as well as virtually and over the phone to try to strike an agreement. Biden had to travel abroad briefly amid negotiations, traveling to Japan for the G7 Summit. He was initially going to travel to Australia and Papua New Guinea, but postponed that leg of his trip to be back for negotiations.

The White House and House Republicans finally came to an agreement over Memorial Day Weekend. The compromise had plenty of critics – conservatives said the deal didn’t cut spending deeply enough and liberals were wary of the new work requirements.

But ultimately, the bill passed both chambers of Congress this week with bipartisan support, several days ahead of the default deadline.