US Senate passes bill to end debt ceiling impasse and avoid default

The US Senate has approved a financial deal between the White House and congressional Republicans, ending a weeks-long political impasse that triggered an unprecedented debt default in the world’s biggest economy.

Lawmakers in the upper house passed the bill on Thursday evening with overwhelming bipartisan support, with 63 supporting the legislation and 36 opposing it. The House of Representatives approved the agreement on Wednesday night.

The bill now heads to President Joe Biden’s desk for his signature, just four days before the US Treasury estimates it will run out of cash to pay all its bills. Such a scenario would have been a huge self-inflicted wound for Washington and a potentially painful blow to the global economy and financial markets.

“Senators from both parties voted to protect the hard-earned economic progress we’ve made and to prevent default by the United States of America for the first time,” Biden said in a statement after the vote. “Together, they demonstrated once again that America is a nation that pays its bills and lives up to its obligations – and always will be.”

The agreement extends US borrowing limits until 2025 and sets new caps on government spending for the next two years, imposing more restrictions on US fiscal policy until at least after the next presidential election.

The Senate vote capped weeks of drama in Washington, including tense talks between Biden aides and negotiators for Republican House Speaker Kevin McCarthy, who reached an agreement last Saturday.

Biden and congressional leaders then launched a push to persuade rank-and-file members to vote quickly to approve the deal in a highly polarized political climate.

The final Senate vote came after a series of amendments from lawmakers unhappy that certain conditions of the bill failed to pass. Virginia Democrats Tim Kaine and Mark Warner unsuccessfully sought to remove a provision that would have accelerated completion of the controversial gas pipeline.

Meanwhile, the defense hawk, led by Lindsey Graham, a South Carolina Republican, got crucial assurances from Senate leaders in the final hours that the treaty would not constrain the Pentagon’s spending needs, including those needed to deal with crises in Ukraine, Taiwan or the Middle East. Can East.

The debt ceiling stand-off will prove less painful for investors than a similar political showdown in 2011 between former President Barack Obama and then-Republican Speaker of the House John Boehner. That brush with default resulted in a downgrade of the Triple A US credit rating by Standard & Poor’s and a sharp sell-off in equities.

But the political wrangling of the past weeks highlighted the extent to which Republicans were prepared to use borrowing limits to extract policy concessions.

The White House and members of Biden’s Democratic Party have explored ways to avoid future debt ceiling battles, including whether they have legal power not to honor the debt ceiling by invoking the Constitution’s 14th Amendment. is the basis.