The US House overwhelmingly approved a debt ceiling and budget cuts package, potentially removing the spectre of the United States defaulting on its debt. This would have had catastrophic consequences for the US and global economy.
The bill, which US President Joe Biden and Speaker Kevin McCarthy negotiated, has been sent to lawmakers in the Senate for swift passage in a matter of days.
Democratic majority leader Chuck Schumer said he would submit it “as quickly as possible” so that “we avoid default”.
The hard-fought compromise pleased few, but lawmakers assessed it was better than the alternative – a devastating economic upheaval if Congress failed to act. Tensions ran high as hard-right Republicans refused the deal, but Biden and McCarthy assembled a bipartisan coalition to push it through on a 314-117 vote late Wednesday.
“We did pretty dang good,” McCarthy said afterwards.
After a long debate Washington is rushing to wrap up work on the package to ensure the government can keep paying its bills and prevent financial upheaval at home and abroad. The Treasury has said the US would run short of money and risk a dangerous default on 5 June.
Biden had been calling lawmakers directly to shore up backing. McCarthy worked to sell sceptical fellow Republicans, even fending off challenges to his leadership, to avert a potentially disastrous US default.
A similar bipartisan effort from Democrats and Republicans will be needed in the Senate to overcome objections.
Overall, the 99-page bill would make some inroads in curbing the nation’s deficits as Republicans demanded, without rolling back Trump-era tax breaks as Biden wanted.
The package restricts spending for the next two years, suspends the debt ceiling into January 2025 and changes some policies, including imposing new work requirements for older Americans receiving food aid. It also increases funds for defence and veterans and reduces new money for Internal Revenue Service agents.
Raising the nation’s debt limit, now $31 trillion [€ 29 trillion], ensures the US Treasury can borrow to pay the country’s already incurred debts.