Biden addresses nation after Senate passes debt limit bill

U.S. President Joe Biden shakes hands with U.S. House Speaker Kevin McCarthy after the State of the Union address to a joint session of Congress at the Capitol on Feb. 7, 2023, in Washington, DC.

President Joe Biden stressed the bipartisan nature of an agreement to raise the debt ceiling in his first Oval Office address on Friday, commending leaders from both parties and warning in stark terms about what could have happened if a deal was not reached. 

He also said that he would sign the debt ceiling bill on Saturday. 

The president went out of his way to mention House Speaker Kevin McCarthy by name, commending him for operating “in good faith.”

He said the rest of congressional leadership – House Minority Leader Hakeem Jeffries, Senate Majority Leader Chuck Schumer, and Senate Minority Leader Mitch McConnell – all “acted responsibly and put the good of the country ahead of politics.” 

Biden also touted his own priorities, including protecting Medicaid, Medicare and veterans’ benefits from cuts and keeping his infrastructure and CHIPs and Science laws intact.

But despite taking a few swipes at Republican priorities, Biden still came back to cooperation, saying, “I know bipartisanship is hard and unity is hard, but we can never stop trying.”

U.S. President Joe Biden delivers a nationally televised address from the Oval Office of the White House on June 2 in Washington, DC.

President Joe Biden said the budget deal that will raise the federal borrowing limit and avoid default is proof that the type of bipartisanship he promised as a candidate to seek was not only still possible but essential to avoiding disaster.

The president, speaking from the Oval Office on Friday evening, told Americans the package ensures economic progress going forward and amounts to a “crisis averted.”

“Passing this budget agreement was critical. The stakes could not have been higher,” he said.

The decision to speak in the most formal of presidential settings came after weeks of fraught negotiations over the borrowing limit with House Speaker Kevin McCarthy.

In his address, Biden underscored his efforts to work across the aisle to secure a positive outcome — an objective he noted had been met with intense skepticism.

The president said neither Republicans nor Democrats “got everything they wanted but the American people got what they needed.”

“We averted an economic crisis and an economic collapse,” he said.

The Treasury Department had said it will run out of cash to pay its bills in full and on time on Monday. Economists had warned of severe consequences of a national default.

President Joe Biden said he will sign the debt limit bill on Saturday.

The legislation was passed by both chambers of Congress this week as lawmakers scrambled to avoid a US debt default.

President Joe Biden is addressing the nation from the Oval Office after both chambers of Congress passed a budget agreement that will raise the debt ceiling and avoid default.

The remarks come after weeks of fraught negotiations over the borrowing limit. The deal struck between Biden and House Speaker Kevin McCarthy will raise the debt ceiling for two years, freeze domestic spending, impose some new work requirements on food stamps and alter certain energy permitting rules.

The measure cleared the House and Senate in the last few days and Biden is expected to sign the bill into law before the end of the weekend.

The president is expected to tell Americans the package ensures economic progress going forward and emphasize the high-stakes nature of the negotiations and agreement, according to excerpts of the speech.

President Joe Biden is expected to emphasize the high stakes in passing the debt ceiling and its implication on the economy in his planned Oval Office address Friday night.

The president is expected to speak around 7 p.m. ET.

Biden will talk about the importance of passing a budget that “continues to grow our economy and reflects our values as a nation,” according to an excerpt of the speech.

 “That’s why I’m speaking to you tonight — to report on a crisis averted and what we are doing to protect America’s future. Passing this budget agreement was critical. The stakes could not have been higher,” the excerpt says.

He will also discuss the negotiations between the White House and House Republicans, including mentions of cutting spending and protecting Social Security, Medicare and Medicaid. 

“No one got everything they wanted but the American people got what they needed. We averted an economic crisis and an economic collapse,” according to the excerpt.

Biden will sign the bill into law as soon as Saturday, the White House said.

Traders work on the floor of the New York Stock Exchange on Friday.

The Dow on Friday saw its best one-day gain since January as Wall Street applauded the debt ceiling bill that the Senate passed on Thursday night. Investors also cheered the May jobs report, which showed a cooldown in some parts of the labor market.

All three major indexes rose for the week, with the Nasdaq Composite notching its sixth straight week of gains. 

The White House said Friday that President Joe Biden will sign the bill raising the debt ceiling “as soon as tomorrow,” leading investors to breathe a sigh of relief after weeks of concern that the United States could default on its debt for the first time. 

Meanwhile, the May jobs report showed that the labor market remains hot but has some pockets of cooling. 

The VIX, Wall Street’s fear gauge, fell to 14.6, closing below 15 for the first time since February 2020.

Remember: As stocks settle after the trading day, levels might still change slightly. 

White House press secretary Karine Jean-Pierre speaks to reporters on Friday.

President Joe Biden will sign the bill raising the debt ceiling “as soon as tomorrow,” the White House said Friday.

She said the White House would have to “let the House and the Senate do what they need to do,” so it can be delivered to Biden’s desk for his signature. 

The legislation needs to be finalized by Monday to ensure the US is able to pay all of its bills. 

Biden’s Oval Office speech: Biden chose Friday evening for his Oval Office address because of the “gravity” of the moment, the White House said Friday, previewing a message of how important it was to avoid the nation’s first-ever default — and to do so in a bipartisan way. 

“There is a gravity as you all can imagine of this moment,” Jean-Pierre said, “and so the president wanted to make sure that he addressed the American people directly.” 

Biden is expected to speak at 7 p.m. ET in his first address from the Oval Office as president.

Jean-Pierre said Biden wanted to “lay out” for the American people the kind of “catastrophe” it would have been to “undermine the full faith and credit of the United States.”

“He just wanted to make sure that the American people understood how important it was to get this done, how important it was to do this in a bipartisan way,” she added.

The Treasury Department building in Washington, DC, May 19.

The faucets at the US Department of the Treasury are set to turn back on after nearly five months of frozen pipes.

In a vote on Thursday evening, the Senate approved a measure to suspend the nation’s debt limit through January 1, 2025. President Joe Biden is expected to swiftly sign the bill into law to avert the United States’ first-ever default on its debt.

Since the debt ceiling was breached in mid-January, the Treasury Department has not been able to borrow more money. To pay its bills on time, Treasury has undergone a series of extraordinary measures to buy it more time in hopes that Congress takes action to suspend or raise the debt limit.

These measures included selling existing investments and suspending reinvestments of the Civil Service Retirement and Disability Fund and the Postal Service Retiree Health Benefits Fund. Doing so helped the Treasury free up billions of dollars to delay a potential default.

Now, Treasury will try to quickly get back to business as usual. To do that, the Treasury will need to raise cash. Fast.

By law, the Treasury Department is obligated to make any funds that were affected by the extraordinary measures whole. It is also required to pay interest on the lapse in funding.

One way it hopes to grow its cash balance is by auctioning off $15 billion worth of one-day cash management bills on Friday.

These bills mature in a relatively short time frame, ranging from a few days to a year, according to the Treasury Department. They’re used to help manage the Treasury’s short-term financing needs.

Unlike Treasury bill auctions that occur on a weekly and monthly basis, cash management bill auctions are irregular, though not uncommon. For instance, last year the Treasury held more than 30 cash management bill auctions.

It is, however, quite unusual for the department to auction debt that matures in just one day. Over the past 25 years, the Treasury has held just six one-day cash management bill auctions.

In addition to Friday’s auction, a Thursday auction saw $25 billion of three-day cash management bills yielding 6.15%. That exceeds the yields at which almost all other Treasury bills are trading, underscoring the premium investors are demanding to buy the government’s debt.

The Treasury is tentatively issuing an additional $123 billion in longer-term bills on June 8. Ahead of the Senate’s vote, the Treasury said it was “conditional on enactment of the debt limit suspension because Treasury forecasts insufficient headroom under the current debt limit to issue securities in these amounts on June 8.”

Translation: The Treasury had been hedging its bets so that it is not on the hook to make interest payments on time to bill holders in the event that the debt ceiling deal wasn’t signed to law in time to avert default. Now that the Senate has passed the bill and Biden has said he’d sign it, Treasury is set to announce more borrowing initiatives.

Read more here.

People are silhouetted inside the US Capitol on Friday.

Fitch Ratings is keeping the United States on watch for a potential credit rating downgrade even after Congress passed a last-minute bill to avert a disastrous default.

Fitch Ratings on Friday said it is keeping the United States on rating watch negative and plans to make a decision on a potential downgrade by the end of September.

Although the resolution to the debt ceiling fight is a “positive,” Fitch expressed deep concern about the recurring brinksmanship and worsening polarization in Washington.

Fitch argued on Friday there has been a “steady deterioration in governance over the last 15 years.”

Why this matters: A credit rating downgrade would raise the government’s borrowing costs, forcing Washington to spend more money on interest and less on education, healthcare, defense and other priorities.

Fitch, one of the three major ratings companies, put the United States on watch for a potential downgrade last week before House Republicans and President Joe Biden reached a compromise to raise the debt ceiling. The Congressional Budget Office estimates the agreement will provide an estimated savings of $1.5 trillion over the next decade.

Fitch said it plans to resolve the negative watch in the third quarter. It will consider the “full implications of the most recent brinksmanship episode” as well as the outlook for the medium-term trajectory for the budget and debt.

Read more here.

There are a few adjustments to the Temporary Assistance for Needy Families (TANF) program under the new debt ceiling package.

Currently: States must ensure that a certain share of those receiving cash aid from the TANF program participate in specific work-related activities – 50% for all families and 90% for two-parent households.

Only certain activities, including employment, training, job search assistance and community service programs, satisfy the mandate.

New: The legislation tightens the current work requirements, primarily by adjusting the work participation rate credits that states can receive for reducing their number of cases. Starting in October 2025, the formula will compare the current count with what it was in 2015 instead of 2005.

Because caseloads declined significantly in most states between 2005 and 2015, these states will have to make sure a greater share of families are working to meet the mandate.

Read more details on other programs here.