“On Saturday, June 3, 2023, the President signed into law … H.R. 3746, the ‘Fiscal Responsibility Act of 2023,’ which suspends the public debt limit through January 1, 2025, and increases the limit on January 2, 2025, to accommodate the obligations issued during the suspension period,” it said. The bill also rescinds certain unobligated balances, expands work requirements for a number of federal programs, modifies environmental review processes, and terminates the suspension of federal student loan payments.
Earlier, Biden said in a statement that the passing of legislation in Congress earlier this week to raise the United States’ debt ceiling was “critical” and averted an economic crisis and collapse. “Passing this budget agreement was critical. The stakes could not have been higher,” Biden said on Friday.
“We averted an economic crisis and an economic collapse. “Earlier this week, US lawmakers passed the Fiscal Responsibility Act, an agreement reached between Biden and House of Representatives Speaker Kevin McCarthy to raise the debt ceiling in exchange for limited fiscal reforms. The United States could have defaulted on its financial obligations as soon as next week if an agreement were not finalized by then, according to the Treasury Department.
On Friday, however, Fitch Ratings said in a statement that it will maintain a negative watch on United States’ AAA sovereign rating until the third quarter of this year, as it studies the fallout from events leading to the higher debt ceiling agreed between President Biden and his Republican rivals.F itch acknowledged that the deal to suspend the previous debt ceiling of $31.4 trillion had passed the US Senate and only needed President Joe Biden’s signature to become law but said it would maintain the negative watch on the United States rating. Fitch cited a legacy of troubling governance over the past decade-and-a-half as one of the reasons for its decision, the statement said.
Fitch blamed its weak confidence in the governing process on the cantankerous negotiations between Democrats aligned to Biden and Republicans led by House of Representatives Speaker Kevin McCarthy prior to the debt deal. Fitch said it believed the US rating was supported by exceptional strengths, including the size of the economy, high GDP per capita and a dynamic business environment. The US dollar being the world’s preeminent reserve currency also gave the government unparalleled financing flexibility, although some of these strengths could be eroded over time by governance shortcomings, it added.