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WASHINGTON: US senators voted to suspend the federal debt limit Thursday, capping weeks of fraught negotiations to eliminate the threat of a disastrous credit default just four days ahead of the deadline set by the Treasury.

Economists had warned the country could run out of money to pay its bills by Monday – leaving almost no room for delays in enacting the Fiscal Responsibility Act, which extends the government’s borrowing authority through 2024 while trimming federal spending.

Hammered out between Democratic President Joe Biden and the Republicans, the measure passed the Senate with a comfortable majority of 63 votes to 36 a day after it had sailed through the House of Representatives.

“No one gets everything they want in a negotiation, but make no mistake: this bipartisan agreement is a big win for our economy and the American people,” Biden said in a statement posted to social media.

He said he would sign the bill “as soon as possible” and address the nation Friday.

Democratic Senate Majority Leader Chuck Schumer added that the nation could “breathe a sigh of relief” after avoiding a “catastrophic” economic collapse.

“But, for all the ups and downs and twists and turns it took to get here, it is so good for this country that both parties have come together at last to avoid default,” he said.

The bill – which now heads to Biden’s desk to be signed into law – ended a day of intense back-and-forth between party leaders and rank-and-file members who had threatened the bill’s quick passage with last-minute gripes about the details.

Democratic leaders had spent months underlining the havoc that a first default in history would have wrought, including the loss of millions of jobs and $15 trillion in household wealth, as well as increased costs for mortgages and other borrowing.

‘Behind the eight ball’

The late evening drama came after a series of failed ballots on amendments sought mainly by Republicans who were threatening at one point to hold up the process, dragging it deep into the weekend.

Senators elected to offer 11 tweaks to the 99-page text, many objecting to funding levels for their pet projects – from border control and Chinese trade to taxation and the environment – and each requiring a vote.

Defense hawks upset at Pentagon spending being capped at Biden’s budget request of $886 billion threatened at one point to derail the bill’s passage entirely.

US debt ceiling deal faces its first test in Congress, amid right-wing pushback

In the end, they fell in line after being offered a commitment to a separate bill providing cash for Ukraine’s defense against the Russian invasion, and promoting US national security interests in the Middle East and in the face of Chinese aggression against Taiwan.

“As currently written, this bill puts our military behind the eight ball… The first and most important dollars we allocate each year in the budget are those to protect and defend the United States and our interests,” said South Carolina Republican Lindsey Graham.

America spends more money than it collects through taxation, so it borrows money via the issuing of government bonds, seen as among the world’s most reliable investments.

Around 80 years ago, lawmakers introduced a limit on how much federal debt could be accrued.

Politically toxic

The ceiling has been raised more than 100 times since to allow the government to meet its spending commitments – usually without drama and with the support of Democrats and Republicans – and stands at around $31.5 trillion.

Both parties see raising the debt limit as politically toxic, although they acknowledge that failure to do so would plunge the US economy into a depression and roil world markets as the government missed debt repayments.

Republicans hoped to weaponize the extension to campaign against what they see as Democratic overspending ahead of the 2024 presidential election, although hikes in the debt ceiling only cover commitments already made by both parties.

Kevin McCarthy, the top lawmaker in the Republican-led House, had touted the bill he spent weeks negotiating as a big victory for conservatives, although he faced a backlash from hardliners on the right who said he made too many concessions on spending cuts.

He fell one short of the 150 votes – two-thirds of his caucus – he had promised to deliver in the lower chamber as he fought to quell a right-wing rebellion, and needed Democratic help to advance the bill to the Senate.

On the other end of Pennsylvania Avenue, the vote was being touted as a major victory for Biden, who managed to protect almost all of his domestic priorities from deep cuts threatened by Republicans.

“This legislation protects the full faith and credit of the United States and preserves our financial leadership, which is critical to our economic growth and stability,” said US Treasury Secretary Janet Yellen.


Comments are closed.

Sohail Jun 02, 2023 12:07pm
what a drama.....better than any movie or play....
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Mudassir Hussain Azeemabadi Jun 02, 2023 02:08pm
Isn't increasing the debt ceiling a short term solution? It seems the only joy is to avoid the US economy from crumbling and putting it's adverse affect on the globe.
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Love Your Country Jun 02, 2023 02:24pm
@Sohail, and we complain about our politicians for regularly flipping the arguments in their favour..
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Rebirth Jun 02, 2023 03:15pm
Their debt is at 32 trillion dollars and it’s likely to go to 35-36 trillion in one year, which is what the new limit is. Biden will have one more budget in 2024 and they’ll have to raise it again because the funding for wars will be possible using supplementary budgets that is not covered in this so-called debt deal. This only covers announced budgets. If any Pakistani thinks that what these people did was the right thing to do for any nation, doesn’t understand basic economics. We have to make spending cuts, remove ghost employees, lease government buildings, cut down foreign missions’ spending, collects bills and taxes. All on merit, based on their productivity and efficiency. They think they saved trillions of dollars when in fact they’ve dug a deeper hole for themselves that they will find it even harder to get out of. It seemed like it would take decades for their collapse. Now, it’ll be less than a decade. No one in their right mind should take lessons from this in Pakistan.
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Tulukan Mairandi Jun 02, 2023 05:33pm
Meanwhile.... Pakistan heading towards its first default and second breakup.
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