Michael Hernandez
06 June 2023•Update: 06 June 2023
WASHINGTON
President Joe Biden said Tuesday the US' "historic recovery continues" after he was able to strike a deal with Republican lawmakers to avert a potentially catastrophic economic default.
"This could have been the week that catastrophic default happened, putting millions of people's jobs in jeopardy, but instead we prevented the default," Biden told reporters during remarks before he began a closed-door Cabinet meeting.
"Through bipartisan agreement here we prove once again that American democracy can function, and I think it's impossible for it to be able to function unless you can have compromise and consensus, and we got a lot of that done," he added.
Biden signed the agreement Saturday to lift the debt ceiling into law after it cleared both chambers of Congress in hard-fought votes earlier in the week. Republican sign-off on raising the debt ceiling ensured the federal government did not run short of cash to pay its financial obligations, which would have sent shockwaves throughout the global economy.
The law 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.
Treasury Secretary Janet Yellen said the agreement protects the "full faith and credit" of the country and preserves its financial leadership.
The debt limit was hit in January, but the Treasury Department took extraordinary steps to ensure the US continued to pay its bills while lawmakers hammered out a deal. The financial wiggle room afforded by those maneuvers was due to run out this week.
The US has never defaulted on its debt, while the debt ceiling has been raised 22 times between 1997 and 2022.
