The Senate has Approved a Deal to Raise the Debt Ceiling, Preventing the United States from Defaulting

WASHINGTON—The Senate passed broad legislation on Thursday that suspends the $31.4 trillion debt ceiling while slashing federal spending, supporting a bipartisan agreement reached by President Biden and House Speaker Kevin McCarthy to avoid an unprecedented U.S. default.

The 63-36 vote represented bipartisan support, with supporters arguing that the necessity to raise the nation’s borrowing ceiling outweighed concerns about provisions pertaining to military and domestic spending, as well as energy policy, among other sensitive subjects.

The law now heads to the president for signature, with many days to spare before the government runs out of money to pay all of its debts on Monday, according to the Treasury Department.

Biden commended Senate leaders for their speedy effort and promised to sign the bill as soon as possible. “No one ever 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,” he said.

After months of finger-pointing, the bill’s passing marked the end of a relatively straightforward chapter in Congress’s efforts to address the debt ceiling. Democrats accused Republicans of recklessly leveraging the threat of default to extract concessions, while Republicans replied that the nation’s mounting debt required quick action, while also ruling out higher taxes proposed by Biden.

Democrats control the Senate 51-49, and the bill received support from 46 Democratic caucus members and 17 Republicans, pushing it beyond the 60-vote threshold. One senator, Tennessee Republican Bill Hagerty, did not vote.

“Democrats are feeling very good tonight,” stated Senator Chuck Schumer (D-NY). “We’ve saved the country from the scourge of default,” he said, emphasizing that the agreement was supported by much more Democrats than Republicans.

Sen. John Barrasso (R., Wyo. ), a member of GOP leadership who voted against the plan, saying it “does not do enough to match the seriousness of the moment and the dangerous debt crisis our country is facing.”

The Treasury Department said in January that the country had reached its debt ceiling and was resorting to exceptional measures to keep the government afloat. Biden first refused to engage on the debt ceiling, asking that it be lifted without restrictions. However, discussions between McCarthy, a California Republican, and the Democratic president resumed last month after House Republicans startled many Democrats by remaining virtually united in passing a package proposing major spending cuts and pulling back elements of Biden’s climate and tax plan.

The Senate voted Thursday after the House passed the bill late Wednesday. Despite fierce conservative concerns that the package did not do enough to control spending and liberal protests about new job requirements, a significant majority of House Democrats and Republicans voted in support of the program.

Senators agreed to consider 11 amendments pertaining to topics such as budget balancing and a clause speeding approval of the Mountain Valley Pipeline, a natural-gas pipeline, as part of an agreement to allow the Senate to fast-track the vote. All were rejected, as leaders warned that any of them would push the bill back to the House, which had already left town, and cause a delay in passage.

The Fiscal Responsibility Act would extend the debt ceiling until January 1, 2025, postponing the problem until after the 2024 elections, in exchange for cuts to certain domestic programs and a 3% restriction on military spending increases in fiscal 2024. It would provide $45 billion for a recently established program that would expand coverage for veterans exposed to toxic burn pits, formally end a three-year freeze on student loan payments, expedite large-scale energy and infrastructure projects, and raise the age at which able-bodied, low-income adults without dependents must work to receive food assistance to 54.

It excludes major programs such as Medicare and Social Security, demonstrating how lawmakers are hesitant to address the major drivers of U.S. debt and have confined their fights to the narrow space of the discretionary budget, which accounts for nearly a third of spending, leaving major programs out of the equation.

The agreement primarily maintains Biden’s legislative accomplishments from last year, despite Republicans’ limited success in leveraging the debt ceiling to demolish his climate, tax, and health package, the Inflation Reduction Act. However, Republicans may point to spending reduction because budget ceilings are in effect for fiscal years 2024 and 2025, and the party was successful in clawing back some cash for the Internal Revenue Service as well as unspent Covid-19 money.

According to the Congressional Budget Office, the Act would lower federal deficits by nearly $1.5 trillion over a decade compared to the baseline prediction.

Because the United States frequently runs huge annual deficits, the debt limit must be addressed on a regular basis. When the limit is reached, Congress must either increase or suspend the ceiling before the Treasury Department can issue additional debt.

In recent days, the Treasury Department has auctioned ultrashort-term debt, including $15 billion in one-day notes that settle Monday and mature Tuesday. The Treasury Department has stated that it has enough room under the debt limit to issue these securities, as well as other longer-term securities, but has warned that they may not generate enough income to pay the government’s debts if the debt ceiling is not expanded.

The Senate discussion on Thursday provided the sharpest insight into previously unseen fissures, notably among Senate Republicans. The talks were mostly between McCarthy and Biden, with Senate Minority Leader Mitch McConnell (R-Ky.) staying out of it.

Defense hawks, such as Sen. Lindsey Graham (R., S.C.), expressed concern that the small increase in military spending would hamstring the Pentagon at a time when the US is on high alert due to China’s military threat, including the possibility of an invasion of Taiwan.

“Please stop talking about confronting China when you’re dismantling the American Navy,” Graham yelled on the Senate floor.

Graham and Maine Republican Sen. Susan Collins wanted guarantees that the Senate will attempt to enact the 12 legislation later this year, saying that any cuts to military funding would be disastrous. Graham wanted assurances from the two Senate leaders that a supplementary military spending package will be introduced in order to circumvent the fiscal 2024 cap on military expenditure increases.

Schumer said the Senate would seek “expeditious floor consideration” to pass the appropriations bills and avoid the 1% cut, and he asked Collins and Democratic Sen. Patty Murray of Washington, the vice chair and chair of the Appropriations Committee, respectively, to begin the process of allocating funding. He stated that the Senate would respond to “emerging threats and needs,” and that the debt-ceiling bill does not exclude the Senate from passing additional spending bills.

On final passage, Collins and Murray voted in favor of the debt-ceiling agreement, but Graham voted against it.

The battle has rekindled calls from some Democrats to permanently defuse the debt ceiling as a political weapon. In recent weeks, liberals claimed Biden had the authority to settle the nation’s debts unilaterally under the 14th Amendment of the Constitution, which states that public debt approved by law “shall not be questioned.” Biden has stated that he is looking into the topic, but that it is likely to encounter legal difficulties.

“We would be fools to allow this to happen again,” said Democratic Senator Sheldon Whitehouse of Rhode Island. “Although this one ended well, it got pretty scary, and we really shouldn’t trust ourselves with these debt-limit votes.” When asked about the legislation, Whitehouse stated, “Beats the crap out of default.”