President signs deal two days before expected default

President Joe Biden signed the Fiscal Responsibility Act of 2023 into law Saturday, ending for now the threat of economic calamity from a default on the nation’s debt and putting limits on spending for two years.

The White House issued a statement saying Biden had signed the legislation, days after it was passed by the House and the Senate following weeks of sometimes bitter negotiations with Republicans.

Biden’s signature came just two days before the so-called X-date, when Treasury

Secretary Janet Yellen had said the government would run out of cash to pay its debts. Economists had predicted that if it did so, the resulting collapse in faith in America’s financial promises would cause economic instability around the world.

To avoid that, the legislation Biden signed suspends the nation’s debt ceiling, allowing the government to borrow what it needs to meet its obligations. In remarks to the nation Friday evening, Biden said it had been crucial for Republicans and Democrats to find a way to reach an accommodation.

“Nothing — nothing — would have been more irresponsible. Nothing would have been more catastrophic,” Biden said of a default in his first prime-time address from the Oval Office as president. He added a moment later that such an outcome would have meant “America’s standing as the most trusted, reliable financial partner in the world would have been shattered.”

“So it was critical to reach an agreement,” he said.

Negotiations to reach that agreement seemed unlikely to succeed at times, given the deep ideological differences between Biden’s White House and Republicans, who control the House and have nearly equal numbers in the Senate.

House Republicans, led by Speaker

Kevin McCarthy, had demanded deep spending cuts in Biden’s priorities in exchange for agreeing to raise the debt ceiling. The president initially balked at negotiating, insisting Republicans raise the debt ceiling without conditions, as members of both parties had done in the past.

Those positions — which the two sides maintained for months this year — finally broke down several weeks ago when Biden agreed to begin discussions with McCarthy, R-Calif.

After a deal was finally reached, both men declared victory, with each saying he had won important concessions from his adversary.