U.S. Senate passes debt ceiling bill to prevent default, set to become law

Click to play video: 'U.S. Senate passes debt ceiling bill to prevent default, set to become law'
U.S. Senate passes debt ceiling bill to prevent default, set to become law
WATCH: “We've saved the country from the scourge of default,” Senate Majority Leader Chuck Schumer said on Thursday – Jun 2, 2023

The U.S. Senate on Thursday passed the critical debt ceiling and spending legislation that will ensure the country avoids a federal default, sending the bill to President Joe Biden’s desk and ending one of the most stressful periods of congressional dealmaking in recent memory.

The legislation passed the upper chamber a day after the House united in rare bipartisan fashion to approve the deal reached between Republicans and the White House, which has few fans but will ensure the U.S. can continue to pay its debts.

“America can breathe a sigh of relief,” Senate Majority Leader Chuck Schumer said as he announced an agreement on the vote.

The legislation passed the Senate by 63-36, with both Democrats and Republicans voting no. It will now go to Biden’s desk for his signature, making it law.

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

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Click to play video: 'U.S. debt ceiling: Biden urges lawmakers to pass ‘good news’ budget deal'
U.S. debt ceiling: Biden urges lawmakers to pass ‘good news’ budget deal

Congress was racing to meet a Monday deadline set by the U.S. Treasury — the so-called “X-date” when the nation would run out of reserve funds and other “extraordinary measures” it was using for debt repayments and federal funding since hitting the debt ceiling in January. Economists around the world have been watching nervously as that deadline fast approaches.

Getting the bill through the Senate was no easy task. As they did in the House, Republicans and Democrats had to wrangle enough members to ensure a strong majority despite their misgivings. Top White House staff called individual senators to shore up support.

Schumer also had to allow votes on 11 amendments put forth by senators who had issues with the bill, despite warning earlier Thursday that attempts to change the legislation would bring Congress closer to the X-date.

He called for each amendment to be debated and voted on quickly to ensure final passage “in a timely manner,” and in the end, none of them passed.

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Like Schumer, Senate Republican leader Mitch McConnell signaled he wanted to waste no time.

Touting the House package with its budget cuts, McConnell said Thursday, “The Senate has a chance to make that important progress a reality.”

Click to play video: 'U.S. debt ceiling: Democrat, Republican members speak on voting for tentative deal on ‘Face the Nation’'
U.S. debt ceiling: Democrat, Republican members speak on voting for tentative deal on ‘Face the Nation’

While some of the criticism from senators of both parties was similar to the complaints heard in the House — Republicans unhappy with spending cuts not going far enough, Democrats slamming work requirements — some Republicans also voiced alarm over the bill’s military spending requirements.

National security hawks like Sen. Lindsey Graham of South Carolina said the deal does not boost defence spending far enough, eyeing the need for supplemental spending to support Ukraine for an anticipated counteroffensive against Russia this summer. But Graham said more is needed to counter other foreign threats as well, particularly China.

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“This bill puts us behind the eight-ball,” Graham said on the floor of the Senate ahead of the marathon of votes.

“It’s right to want to control spending, and there are some good things in this bill. But it was wrong to give a defence number inconsistent with the threats we face.”

Instead, senators concerned about the level of military spending secured an agreement from Schumer, which he read on the floor, stating that the debt ceiling deal “does nothing” to limit the Senate’s ability to approve other emergency supplemental funds for national security, including aid to Ukraine, or other national interests.

Click to play video: 'U.S. debt ceiling discussions should’ve started at least 3 months ago: Sen. Manchin'
U.S. debt ceiling discussions should’ve started at least 3 months ago: Sen. Manchin

Overall, the 99-page bill 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 and greenlighting an Appalachian natural gas line that many Democrats oppose.

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It bolsters funds for defence and veterans, cuts back new money for Internal Revenue Service agents and rejects Biden’s call to roll back Trump-era tax breaks on corporations and the wealthy to help cover the nation’s deficits.

The controversial Mountain Valley Pipeline is important to Sen. Joe Manchin, D-W.Va., and he defended the development running through his state, saying the country cannot run without the power of gas, coal, wind and all available energy sources.

The compromise came about after weeks of tense negotiations between House Republicans and the White House that frequently fell apart over GOP calls for spending cuts and Democrats standing firm, insisting on a “clean” bill that would raise or suspend the debt limit without conditions.

Senators largely stayed out of the fight, with both Schumer and McConnell simply urging both sides to reach a deal.

Raising the nation’s debt limit, now US$31.4 trillion, would ensure Treasury could borrow to pay already incurred U.S. debts.

Click to play video: 'Debt ceiling deal: McCarthy calls bill ‘transformational,’ says Congress to spend less money'
Debt ceiling deal: McCarthy calls bill ‘transformational,’ says Congress to spend less money

The nonpartisan Congressional Budget Office said the spending restrictions in the package would reduce deficits by US$1.5 trillion over the decade, a top goal for the Republicans trying to curb the debt load.

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In a surprise that complicated Republicans’ support, however, the CBO said their drive to impose work requirements on older Americans receiving food stamps would end up boosting spending by US$2.1 billion over the time period. That’s because the final deal exempts veterans and homeless people, expanding the food stamp rolls by 78,000 people monthly, the CBO said.

House Speaker Kevin McCarthy, meanwhile, has been celebrating his chamber’s quick bipartisan passage of the bill the night before, which saw Democrats ensure a robust 314-117 vote.

“We did pretty dang good,” McCarthy, said Wednesday night after the vote.

As for discontent from Republicans who said the spending restrictions did not go far enough, McCarthy said it was only a “first step.” He has promised more work in the House to pour over government budgets and eliminate wasteful spending, calling for Democrats to support Republicans in the effort.

— with files from the Associated Press
Click to play video: 'Debt ceiling deal reached by GOP, White House: McCarthy'
Debt ceiling deal reached by GOP, White House: McCarthy

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