2nd June 2023 – (Washington) The U.S. Congress has approved a deal to lift the country’s borrowing limit for the 103rd time since 1945, just days before the world’s largest economy was due to default on its debt. The bipartisan bill passed through the Senate by a vote of 63-36, a day after it cleared the U.S. House of Representatives.
A default would limit the government’s ability to borrow more money or pay all of its bills, potentially wreaking havoc on the global economy. It would also affect prices and mortgage rates in other countries.
The bill passed on Thursday night with support from 44 Democrats and 17 Republicans, plus two independents. Sixty votes were required to approve the measure in a 100-seat chamber that Democrats only narrowly control.
The deal suspends the debt ceiling, the spending limit set by Congress that determines how much money the government can borrow, until 1 January 2025. The legislation will result in $1.5tn in savings over a decade, according to the Congressional Budget Office.
The bill drew objections from both right-wing Republicans and left-wing Democrats, but there were enough centrists in both parties to get it over the line. Among the four Democrats who voted against were left-wing senators Bernie Sanders, John Fetterman, and Elizabeth Warren.
The last time the U.S. came close to overshooting its debt ceiling, in 2011, the credit agency Standard & Poor’s downgraded the country’s rating, a move that has yet to be reversed.
The passage of the bill has been seen as a rare moment of bipartisanship in an increasingly divided Congress. President Joe Biden has said he will enact the measure into law, sparing the US from a catastrophic default on its $31.4tn debt.
The country was forecast to overshoot its current debt ceiling on Monday, 5th June. Ahead of the Senate vote, US stock markets made gains, with the Dow closing 0.5% higher. The broader S&P 500 index rose by 1% and the tech-heavy Nasdaq ended the day 1.3% higher.