President Biden signed the Fiscal Responsibility Act of 2023 into law on Saturday, ending for now the threat of economic calamity from a default on the nation’s debt and putting limits on spending for two years.
The White House issued a statement saying that Mr. Biden had signed the legislation, days after it was passed by the House and the Senate following weeks of sometimes bitter negotiations with Republicans.
Mr. Biden’s signature came just two days before the so-called X-date, when Janet L. Yellen, the Treasury secretary, had said the government would run out of cash to pay its debts. Economists had predicted that if it did so, the resulting collapse in faith in America’s financial promises would cause economic instability around the world.
To avoid that, the legislation Mr. Biden signed suspends the nation’s debt ceiling, allowing the government to borrow what it needs to meet its obligations. In remarks to the nation on Friday evening, Mr. Biden said it had been crucial for Republicans and Democrats to find a way to reach an accommodation.
“Nothing — nothing would have been more irresponsible. Nothing would have been more catastrophic,” Mr. Biden said of a default in his first prime-time address from the Oval Office as president. He added a moment later that such an outcome would have meant that “America’s standing as the most trusted, reliable financial partner in the world would have been shattered.”
“So it was critical to reach an agreement,” he said.
Negotiations to reach that agreement seemed unlikely to succeed at times, given the deep ideological differences between Mr. Biden’s White House and Republicans, who control the House and have nearly equal numbers in the Senate.
House Republicans, led by Speaker Kevin McCarthy, had demanded deep spending cuts in Mr. Biden’s priorities in exchange for agreeing to raise the debt ceiling. The president initially balked at negotiating, insisting that Republicans raise the debt ceiling without conditions, as members of both parties had done in the past.
Those positions — which the two sides maintained for months this year — finally broke down several weeks ago when Mr. Biden agreed to begin discussions with Mr. McCarthy, a California Republican.
After a deal was finally reached, both men declared victory, with each saying he had won important concessions from his adversary.
Mr. McCarthy characterized the deal as “a major victory” and an important step toward necessary cuts in government spending, which the Congressional Budget Office estimated would be reduced by about $1.5 trillion over the course of the next decade.
“We’re finally bending the curve on discretionary spending because of this bill, and we’re doing it while at the same time raising our national defense and our veterans fully funded, with Social Security and Medicare preserved,” Mr. McCarthy said in a speech on the House floor after the bill passed.
At the same time, Mr. Biden and his aides described the deal as a success because the White House beat back more draconian spending cuts that Republicans had initially proposed. They said Mr. Biden’s agenda ended up largely untouched even as Republicans agreed to raise the debt ceiling — something many in the party had vowed not to do.
Since the deal was announced, there has been some grumbling on both sides. Some conservative Republicans voted against the measure in the House, saying it did not cut spending enough. Some Democrats opposed it because it imposed new work requirements on some adults receiving food stamps and gave the green light to a natural gas pipeline opposed by environmentalists.
But Mr. Biden said in his speech on Friday that the final agreement was what each side could have expected in divided government.
“No one got everything they wanted, but the American people got what they needed,” he said. He added, praising Mr. McCarthy: “We were able to get along and get things done. We were straightforward with one another, completely honest with one another, respectful with one another. Both sides operated in good faith. Both sides kept their word.”