WASHINGTON — President Joe Biden signed the Fiscal Responsibility Act on Saturday, ending the immediate threat of a federal default after Congress approved the bipartisan compromise by wide margins in both chambers. The law suspends the statutory debt limit through January 1, 2025, imposes caps on discretionary spending, rescinds selected previously appropriated funds and makes changes to federal benefit and permitting rules.

The enacted text of H.R. 3746 converts the agreement negotiated by Biden and House Speaker Kevin McCarthy into law. The debt-limit suspension is temporary but consequential: Treasury can resume ordinary borrowing to finance obligations Congress has already authorized, removing the immediate risk that the government would run out of cash in the coming days.

A bipartisan vote built from divided parties

The House approved the bill 314-117 on Wednesday. The official House roll call shows 149 Republicans and 165 Democrats voting yes, while 71 Republicans and 46 Democrats opposed it. The unusual coalition reflected the central political tradeoff: neither party received its preferred outcome, and both leadership teams needed votes from the other side to pass the measure.

The Senate followed Thursday night with a 63-36 vote after rejecting a series of amendments that would have forced the legislation back to the House. The Senate’s vote summary recorded final passage after hours of debate over defense spending, work requirements and the scale of the fiscal restraints. The choice to avoid amending the bill was critical because Treasury had warned that even a short delay could push the government into the period when it might not be able to meet all obligations.

The agreement constrains spending but does not balance the budget

The Congressional Budget Office estimated in its May 30 analysis that the legislation would reduce projected budget deficits by about $1.5 trillion over the 2023-2033 period compared with CBO’s baseline, with much of the savings coming from caps on discretionary spending. The bill also changes Supplemental Nutrition Assistance Program work requirements for some adults, modifies permitting rules, rescinds unspent pandemic relief and reduces part of the additional funding previously provided to the Internal Revenue Service.

The House Budget Committee’s May 31 breakdown emphasized the spending caps and rescissions, while also acknowledging that some provisions increase spending. The legislation therefore is not a comprehensive solution to the government’s long-term fiscal imbalance. Social Security, Medicare and other major mandatory programs remain largely outside the agreement, as do the underlying tax policies that shape federal revenue.

Treasury can rebuild cash after weeks of extraordinary measures

Treasury Secretary Janet Yellen welcomed passage in a June 1 statement, saying the legislation protects the full faith and credit of the United States and prevents a first-ever default. Treasury has been using extraordinary accounting measures since January to remain under the debt limit while continuing to pay federal bills.

Now that the ceiling is suspended, Treasury can return to normal debt issuance and rebuild a cash balance that has been drawn unusually low during the standoff. That rebuilding process is likely to require substantial issuance of Treasury bills in the coming weeks. While technically routine, the volume will be watched by financial markets because it can affect short-term liquidity and competition for cash across money-market instruments.

The political compromise carries costs for both sides

For McCarthy, the agreement demonstrates that the Republican House majority could force negotiations over spending even though its original bill sought much larger reductions. For Biden, it avoids default while preserving most of his major legislative agenda, but it accepts spending limits and other policy changes that the White House had initially argued should not be attached to the debt ceiling.

Opposition came from both ideological wings. Conservative Republicans argued that the bill permits too much borrowing and restrains spending too little. Progressive Democrats objected to work-requirement changes and to the principle of using the debt limit as leverage over budget policy. That cross-pressure helps explain why the final vote coalitions were unusually bipartisan.

Default is averted, but the fiscal dispute is postponed

The immediate accomplishment is clear: the United States has avoided the prospect of missing payments because of the statutory borrowing limit. The law gives policymakers more than a year and a half before the debt ceiling again becomes an operative constraint, pushing the next confrontation beyond the 2024 elections.

But the broader fiscal debate remains unresolved. Federal debt is near historically high levels relative to the size of the economy, interest costs are rising as older debt rolls into higher rates, and projected deficits remain substantial even after the savings in this law. The compromise signed Saturday ends a crisis of timing and legal authority. It does not end the argument over how much the federal government should spend, how much revenue it should collect or how rapidly debt should grow.