U.S. President Joe Biden signed the Fiscal Responsibility Act of 2023 into law on Saturday afternoon to avoid a historic default on government debt.
The bipartisan act suspends the public debt limit through to January 1, 2025, and increases the limit to the actual debt level on January 2, 2025.
According to Goldman Sachs, a global investment bank, U.S. federal government debt would exceed $35 trillion by January 2025, which equals more than $100,000 per U.S. citizen.
"This bipartisan agreement is a big win for our economy and the American people," Biden said moments after the Senate passed the bill late Thursday.
The debt ceiling bill was opposed by 71 Republicans in the House and 17 in the Senate, who argued it did too little to address the federal debt of more than $31 trillion.
"Biden is happily sending Americans over yet another fiscal cliff, with far too many swampy Republicans behind the wheel of a 'deal' that fails miserably to address the real reason for our debt crisis: spending," said Scott Perry, chair of the House Freedom Caucus.
Progressives had their own worries, claiming that the cuts and job requirements betrayed voters. Five progressives in the Senate, including Bernie Sanders of Vermont, and 46 in the House voted against the bill.
"I could not vote in good conscience for a bill that cuts programs for the most vulnerable while refusing to ask billionaires to pay a penny more in taxes," Sanders wrote in a Guardian op-ed published on Friday. "Deficit reduction cannot just be about cutting programs that working families, the children, the sick, the elderly and the poor depend upon."
The United States reached its debt limit of $31.4 trillion in January, more than 120 percent of its annual GDP. For months, as the White House and Congress were locked in a tug-of-war over terms of lifting the debt ceiling, the Treasury Department has been using "extraordinary measures" to avoid default.
U.S. Treasury Secretary Janet Yellen has warned that the country could run out of money to pay its bills on time if Congress failed to address the debt ceiling by June 5.
The debt ceiling is a cap on the total amount of money that the United States is authorized to borrow to fund the government and meet its financial obligations.
Since 1945, the United States has raised its debt ceiling 103 times.