The US Congress has successfully passed a deal to raise the nation’s borrowing limit, averting a potential default on its debt just days before the deadline.
The bipartisan agreement swiftly moved through the Senate with a vote of 63-36, following its approval in the US House of Representatives.
President Joe Biden has expressed his intention to sign the bill into law, ensuring that the United States avoids a disastrous default on its substantial $31.4tn (£25tn) debt.
With the country projected to surpass its existing debt ceiling on Monday, June 5th, this legislation provides a crucial resolution to the looming financial crisis.
Failure to raise the borrowing limit would severely restrict the government’s ability to borrow money and meet its financial obligations, with far-reaching implications both domestically and internationally. It would have a detrimental impact on global markets, affecting prices and mortgage rates in other countries.
During Thursday night’s session, the bill received backing from 44 Democrats, 17 Republicans, and two independents. In the 100-seat chamber, which is narrowly controlled by Democrats, a minimum of 60 votes was required to pass the measure.
Thirty-one Republicans, including prominent party member John Barrasso, opposed the bill. Notably, four Democrats, including senators Bernie Sanders, John Fetterman, and Elizabeth Warren, voted against it.
Initially, senators proposed 11 amendments to the debt ceiling bill. However, all of these amendments were swiftly rejected, clearing the path for the final vote. Had any of the amendments passed, the entire bill would have had to be returned to the House for further consideration, leaving little time to secure its final passage before the US faced a perilous financial situation.
“America can breathe a sigh of relief, a sigh of relief because in this process we are avoiding default,” Democratic Majority leader Chuck Schumer told the Senate.
In a rare display of bipartisanship, Senate Republican leader Mitch McConnell told reporters he would be “proud to support it without delay”.
The deal easily cleared the House on Wednesday evening by a vote of 314-117. Some 165 Democrats joined 149 Republicans in approving it by the required simple majority.
With Republicans in control of the lower chamber of Congress and Democrats holding sway in the Senate and White House, a deal proved elusive for weeks until Mr Biden and House Speaker Kevin McCarthy inked a compromise last weekend.
The agreement suspends the debt ceiling, the spending limit set by Congress that determines how much money the government can borrow, until 1 January 2025.
The legislation will result in $1.5tn in savings over a decade, the independent Congressional Budget Office said on Tuesday.
The contents of the bill drew objections from both right-wing Republicans and left-wing Democrats, but there were more than enough political centrists in both parties to get it over the line.
The last time the US came this close to overshooting its debt ceiling, in 2011, the credit agency Standard & Poor’s downgraded the country’s rating, a move that has yet to be reversed.
Ahead of the Senate vote, US stock markets made gains, with the Dow closing 0.5% higher. The broader S&P 500 index rose by 1% and the tech-heavy Nasdaq ended the day 1.3% higher.