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US President Joe Biden has signed legislation lifting the nation's debt ceiling and averting an unprecedented default on the federal government's debt.
- The legislation was signed with two days to spare until the Treasury Department warned the US would start running out of money
- Raising the nation's debt limit to $US31.4 trillion will ensure the government can borrow to pay debts already incurred
- The final agreement will suspend the debt limit until 2025 and restrict government spending
It was a decidedly low-key outcome to a months-long drama that unnerved finance markets both in the US and abroad.
It also caused anxious retirees and social service organisations to make contingency plans in case the country was unable to pay all its bills.
Instead of holding a public ceremony with politicians from both parties — showcasing the bipartisanship that Mr Biden had cited in an Oval Office address on Friday evening (local time) — the president signed the legislation in private in a reflection of the tight deadline facing the nation's leaders.
The legislation was signed with just two days to spare until the Treasury Department warned the country would start running short of cash, which would have sent shock waves through the US and global economies.
The stand-off began when Republicans refused to raise the country's borrowing limit unless Democrats agreed to cut spending. Eventually, the White House began weeks of intense negotiations with House Speaker Kevin McCarthy to reach a deal.
The final agreement, passed by the House on Wednesday and the Senate on Thursday, will suspend the debt limit until 2025 and restricts government spending.
It gives politicians budget targets for the next two years in hopes of assuring fiscal stability as the political season heats up.
Raising the nation's debt limit, now at $US31.4 trillion ($47.4 trillion) will ensure the government can borrow to pay debts already incurred.
After Congress passed the legislation, Mr Biden used the occasion to deliver his first speech from the Oval Office as president on Friday.
"No-one got everything they wanted but the American people got what they needed," he said, highlighting the "compromise and consensus" in the deal.
"We averted an economic crisis and an economic collapse."
Mr Biden touted the achievements of his first term as he runs for re-election, including support for high-tech manufacturing, infrastructure investments and financial incentives for fighting climate change. He also highlighted ways he blunted Republican efforts to roll back his agenda and achieve deeper cuts.
In addition to restrictions on spending, the 99-page bill changes some policies, including imposing new work requirements for older Americans receiving food aid and green-lighting an Appalachian natural gas pipeline that many Democrats oppose.
Some environmental rules were modified to help streamline approvals for infrastructure and energy projects — a move long sought by moderates in Congress.
AP