President Joe Biden has signed a bill that suspended the US debt ceiling - preventing a federal default that could have disrupted the world's economy.
President Biden discussed the passing of the budget in an address from the Oval Office on Friday (2 June), saying: "Passing this budget agreement was critical. The stakes could not have been higher.
"If we had failed to reach an agreement on the budget, there were extreme voices threatening to take America, for the first time in our 247-year history, into default on our national debt. Nothing, nothing would have been more irresponsible."
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Economists had warned a default would have caused the US unemployment rate to double in addition to harming gross domestic product.
In economic terms, a default means a failure to make repayments on debt.
President Biden signed the bill a day after it was passed in the Senate with a majority vote of 63 to 36. A day earlier, it had passed through the Republican controlled House with 314 votes to 117.
President Biden said: "It was critical to reach an agreement, and it’s very good news for the American people.
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"No one got everything they wanted. But the American people got what they needed."
The White House also released a statement praising Republicans and Democrats for working together in Congress to pass the bill.
President Biden has noted that the bill will safeguard healthcare systems such as Medicare and Medicaid, and fulfill the country's 'sacred obligation' to their veterans.
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This bill will mean that the government's borrowing limit will be suspended until January 2025, by which point a presidential election will have taken place.
While negotiating the bill with President Biden, Republican House Speaker Kevin McCarthy scored some concessions from the President, mostly related to cutting government spending.
The legislation will include a reduction in non-defense discretionary spending as well as changes to work requirements for the Supplemental Nutrition Assistance and the Temporary Assistance for Needy Families programs.
These compromises were something of a minor defeat for President Biden, who had insisted for months that he would not negotiate.
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However, he still praised the 'compromise' bill passed, as it avoided some of the steeper spending cuts that Republicans had advocated for.
President Biden said: "We averted an economic crisis, an economic collapse.
"We’re cutting spending and bringing the deficits down at the same time. We’re protecting important priorities - from Social Security to Medicare to veterans to our transformational investments in infrastructure and clean energy."
Some hard-right Republicans have slammed the bill, claiming it does little to address the national debt of more than $31 trillion.
Ben Thompson