White House - U.S. President Joe Biden is scheduled to deliver remarks Friday evening on the Fiscal Responsibility Act. The bipartisan legislation, achieved following weeks of tough negotiations, suspends the U.S. government's debt limit through January 2025 and avoids a potentially disastrous default on U.S. financial obligations.
Biden will speak from the Oval Office, the most formal of White House settings, usually reserved for subjects of grave importance. It will be the first time Biden speaks to the nation from that setting.
He wants the American people to understand "how important it was to get this done," White House press secretary Karine Jean-Pierre said during her briefing Friday. "Defaulting could have been catastrophic."
Biden is expected to sign the bill "hopefully as soon as tomorrow," she said, adding that the administration is "confident" that with the deal, the government will have the funds to meet its obligations by June 5, the day the Treasury was expected to run out of cash.
The bill allows the government to continue to borrow more money over the next 19 months to meet its obligations, exceeding the current $31.4 trillion debt limit.
The Senate voted Thursday night 63-36 in support of the measure. Democratic Senators John Fetterman, Elizabeth Warren, Ed Markey, Jeff Merkley and Bernie Sanders, an independent who caucuses with Democrats, joined 31 Republicans in voting against the bill.
'Tonight, senators from both parties voted to protect the hard-earned economic progress we have made and prevent a first-ever default by the United States," Biden said in a statement Thursday.
Despite objections by some Republican lawmakers who said it did not cut spending enough and some Democrats who said it trimmed too much, the bill passed the House of Representatives 314-117 Wednesday night. Among the yeas, the 165 votes from Democrats outnumbered the 149 votes from Republicans, who narrowly control the chamber.
The legislation does not set a new monetary cap, but the borrowing authority would extend to January 2, 2025, two months past next year's presidential election. In addition, the legislation calls for maintaining most federal spending at the current level in the fiscal year starting in October, with a 1% increase in the following 12 months.
Reforming the process
With the bickering over, many are pushing for Republicans and Democrats to reform the process of raising the debt ceiling while addressing fiscal health.
"It's time that we really rethink how do we go about our fiscal restructuring and getting our fiscal house in order but without using the debt limit as a hostage negotiation tool," said Rachel Snyderman, senior associate director of business and economic policy for the Bipartisan Policy Center.
Legislation such as the Responsible Budgeting Act, introduced in the last Congress, would reform the budget process but take the risk of default off the table, she told VOA. The bill would require lawmakers to annually debate and vote on deficit-reducing legislation, incorporating debt-reduction targets into a budget resolution.
Current projections by the Congressional Budget Office show a federal budget deficit of $1.5 trillion for 2023. Annual deficits would nearly double over the next decade, reaching $2.7 trillion in 2033.
The deficit is projected to grow from 6.0 percent of gross domestic product next year to 6.9 percent in 2033 - well above the 50-year average of 3.6 percent of GDP, according to the CBO.
Republican House Speaker Kevin McCarthy, who negotiated the deal with Biden, told reporters Thursday that getting the bill passed "wasn't an easy fight." He emphasized the budget savings and criticized Democrats who wanted to separate the debate about future government spending from the need to suspend the debt limit so current financial obligations could be met.
"We put the citizens of America first, and we didn't do it by taking the easy way," McCarthy said. "We didn't do it by the ways that people did in the past, by just lifting [the debt ceiling]. We decided you had to spend less, and we achieved that goal."
McCarthy said he intends to follow Wednesday's action with more efforts to cut federal spending.
The measure does not raise taxes on the wealthy, a step wanted by Democrats. Nor will it stop the national debt total from continuing to increase, perhaps by another $3 trillion or more over the next year and a half until the next expiration of the debt limit.
Other items in the legislation reduce the number of new agents to be hired by the country's tax collection agency; require that states return $30 billion in unspent coronavirus pandemic assistance to the federal government; and extend from 50 to 54 the upper age bracket for those required to work in order to receive food aid.
Ken Bredemeier contributed to this report.