US President Joe Biden has signed a short-term bill to temporarily increase the nation’s borrowing limit, averting a looming debt default that would cause an economic catastrophe, the media reported on Friday.
Biden’s signature late Thursday night came two days after the House of Representatives voted along party lines to approve the bill, reports Xinhua news agency.
The Senate cleared the short-term debt limit extension last week.
The temporary measure would raise the federal government’s debt limit by $480 billion, allowing the Treasury Department to meet obligations through December 3 and giving lawmakers a few more weeks to find a way to address the issue.
Treasury Secretary Janet Yellen had recently warned that lawmakers have until October 18 to raise or suspend the debt limit before the federal government will likely run out of cash and extraordinary measures, possibly leading the US to default on the national debt.
Another stopgap measure to fund the federal government also expires on December 3, meaning Democrats and Republicans will have to reach a deal by early December to avoid the twin threats of a shutdown and a default.
Democrats, meanwhile, are reluctant to raise the national debt limit on their own, fearing that doing so while also trying to pass a large social spending package along party lines could open them up to criticism of being fiscally irresponsible, experts have said.
Disagreements within the party might also dash Democrats’ hopes of going it alone.
Democrats have repeatedly argued that raising the debt limit does not authorize new federal spending, but only allows the Treasury Department to borrow additional funds to cover expenditures that have already been approved by Congress, including Covid-19 relief bills and the tax cuts rolled out during the previous administration of President Donald Trump.
As part of a bipartisan budget deal enacted in August 2019, Congress suspended the debt limit through July 31.
After the debt limit was reinstated on August 1, the Treasury Department began using “extraordinary measures” to continue to finance the government on a temporary basis.
The debt limit, commonly called the debt ceiling, is the total amount of money that the US government is authorised to borrow to meet its existing legal obligations, including social security and medicare benefits, interest on the national debt, and other payments.