Default will not occur - Biden raised the debt limit
US President Joe Biden on Saturday signed a bill that raises the upper limit of the US national debt to prevent the country's first-ever default.
This was announced in a statement by the White House.
"On Saturday, June 3, 2023, the President signed into law H.R. 3746, the 'Fiscal Responsibility Act of 2023,' which suspends the debt limit until January 1, 2025, and increases the limit on January 2, 2025, to accommodate the obligations issued during the suspension period; establishes new discretionary spending limits, provides funding for the Virginia Toxic Impact Fund, cancels certain balances of obligations, expands workforce requirements for certain federal programs, modifies environmental review processes, and terminates the suspension of payments on federal student loans," the White House statement said.
The House of Representatives and the Senate passed the bill this week after Biden and House Speaker Kevin McCarthy reached an agreement following intense negotiations.
"Thanks to Speaker McCarthy, Leader Jeffries, Leader Schumer, and Leader McConnell for their partnership," the White House statement said, referring to the Democratic and Republican leaders in the House of Representatives and the Senate.
Earlier, US Treasury Secretary Janet Yellen warned that the United States could run out of money to pay its bills by June 1 if Congress does not raise or suspend the debt limit.
The Treasury Department had previously warned that the so-called X Date could occur as early as June 1, after which the federal government could face the possibility of defaulting on its debt.
In a letter to lawmakers, Yellen cautioned that the actual date when the federal government may run out of cash could be a few days or weeks later than those estimates.
"Waiting until the last minute to suspend or increase the debt limit could cause significant harm to businesses and consumer confidence, increase the cost of short-term borrowing for taxpayers, and have a negative impact on the credit rating of the United States," Yellen said.
The Treasury Department uses accounting maneuvers known as extraordinary measures to continue paying the country's bills without breaching the $31.4 trillion debt ceiling, which was officially reached on January 19.
Yellen did not disclose any additional measures she plans to take to conserve funds. Budget experts predict that if the government can find sufficient resources to pay its bills until mid-June, quarterly tax inflows may provide additional relief until the end of summer.