The US Senate has passed legislation to raise the government’s $31.4 trillion debt ceiling, just days before what would have been a historic, first-ever default.
“We are avoiding default tonight,” Senate Majority Leader Chuck Schumer said as he steered the legislation through his 100-member chamber. He added: “America can breathe a sigh of relief.”
The Senate voted 63-36 to approve the bill, after the House of Representatives passed it on Wednesday in a 314-117 vote.
Following the vote, US President Joe Biden said: “I look forward to signing this bill into law as soon as possible and addressing the American people directly on Friday”.
The Treasury Department had warned it would be unable to pay all its bills on 5 June if Congress failed to act by then. The new legislation will suspend the statutory limit on federal borrowing until 1 January 2025.
Earlier on Thursday, senators went through nearly a dozen amendments – rejecting all of them – before the final vote. The bill now goes to Mr Biden for signing into law before Monday’s deadline.
Schumer reminded politicians of what was at stake as he steered the bill toward final passage.
A default, he said, “would almost certainly cause another recession. It would be a nightmare for our economy and millions of American families. It would take years, years to recover from.”
The bill will cap some government spending over the next two years, speed up the permitting process for certain energy projects, claw back unused Covid-19 funds and expand work requirements for food aid programmes to additional recipients.
Hardline Republicans had wanted deeper spending cuts and more stringent reforms, while some progressives opposed it for reasons including new work requirements from some federal anti-poverty programmes.