Biden says US debt default would have been 'catastrophic'

Washington: US President Joe Biden addressed the country from the Oval Office for the first time Friday, telling Americans he would sign a bill to raise the debt ceiling into law on June 3.

"I'm going to sign tomorrow," Biden said. "It was critical to reach an agreement, and it's very good news for the American people," he said.

"No one got everything they wanted. But the American people got what they needed," Biden added. "We averted an economic crisis and an economic collapse," he said.

Senate approves bill earlier in the week
The Senate earlier this week passed the bill to raise the debt ceiling and cap government spending for the next two years.

The signing of the bill will end the monthslong fight over raising the limit, which is the amount of money the US can borrow to fund the government.

The nation's debt currently stands at around $31 trillion (€29 trillion), which Republicans say is unsustainable.

Republicans, who currently enjoy a majority in the House of Representatives, refused to raise the debt ceiling unless Biden and the Democrats agree to federal spending cuts.

Reaching a deal to cut spending
But Biden and House Speaker Kevin McCarthy managed to reach an agreement, giving Republicans some of their demanded federal spending cuts but holding the line on major Democratic priorities.

The deal raises the debt limit until 2025 and gives legislators budget targets for the next two years, in hopes of assuring fiscal stability as the political season heats up.

The US Treasury Department had earlier warned that if the debt ceiling wasn't raised beyond Monday, the US government could run out of money and default on its $31 trillion debt.

A default would have likely triggered market panic, a recession and millions of job losses, with global implications.

"Nothing would have been more catastrophic," Biden said, in the context of approaching the debt default deadline of June 5.