Washington averts historic default

President Biden has signed a compromise debt ceiling bill into law

US President Joe Biden signed a bill on Saturday that suspends Washington’s $31.4 trillion debt limit, averting what would have been a first-ever default, just two days before the deadline.

The new law lifts the debt ceiling through January 1, 2025, and caps non-military spending, among other measures.

“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 wrote in a tweet.

The bipartisan debt bill passed the Senate on Thursday after moving through the House of Representatives the day before.

The looming default would have limited the US government’s ability to borrow or pay its bills. It could also have triggered financial havoc overseas, with a massive negative impact on prices and mortgage rates in other countries.

READ MORE: US House approves bill to increase debt limit

The agreement came with little time to spare, as the US was due to default on its massive debt on June 5.

The deal on raising the debt limit had been fiercely debated by Republicans and Democrats for weeks. The prolonged dispute over spending priorities put the measure’s approval at risk amid fears that the Republicans, who hold a majority in the House, would refuse to support the Fiscal Responsibility Act.

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