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Senate races to debt deal finish line

China Daily | Updated: 2023-06-03 07:25

The final vote of 63-36 shows passage of the bill to raise the debt ceiling on Thursday night in the Senate in Washington. SENATE TELEVISION/ASSOCIATED PRESS

WASHINGTON — US senators voted to suspend the federal debt limit on Thursday, the 103rd time since 1945, capping weeks of fraught negotiations to eliminate the threat of a disastrous credit default just four days ahead of the deadline set by the Treasury.

Economists had warned the United States could run out of money to pay its bills by Monday — leaving almost no room for delays in enacting the Fiscal Responsibility Act, which extends the government's borrowing authority through 2024 while trimming federal spending.

Hammered out between Democratic President Joe Biden and the Republicans, the measure passed the Senate with a comfortable majority of 63 votes to 36 a day after it had sailed through the House of Representatives.

"No one 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," Biden said in a statement posted on social media.

He said he would sign the bill "as soon as possible" and address the nation later on Friday.

Democratic Senate Majority Leader Chuck Schumer added that the nation could "breathe a sigh of relief" after avoiding a "catastrophic" economic collapse.

The bill, which now heads to Biden's desk to be signed into law, ended a day of intense back-and-forth between party leaders and rank-and-file members who had threatened the bill's quick passage with last-minute gripes about the details.

Democratic leaders had spent months underlining the havoc that a first default in history would have brought, including the loss of millions of jobs and $15 trillion in household wealth, as well as increased costs for mortgages and other borrowing.

The late evening drama came after a series of failed ballots on amendments sought mainly by Republicans who were threatening at one point to hold up the process, dragging it deep into the weekend.

The US spends more money than it collects through taxation, so it borrows money via the issuing of government bonds. Around 80 years ago, lawmakers introduced a limit on how much federal debt could be accrued.

Politically toxic

The ceiling has been raised more than 100 times since to allow the government to meet its spending commitments — usually without drama and with the support of Democrats and Republicans — and stands at around $31.5 trillion.

Both parties see raising the debt limit as politically toxic, although they acknowledge that failure to do so would plunge the US economy into a depression and roil world markets as the government missed debt repayments.

Republicans hoped to weaponize the extension to campaign against what they see as Democratic overspending ahead of the 2024 presidential election, although hikes in the debt ceiling only cover commitments already made by both parties.

Kevin McCarthy, the top lawmaker in the Republican-led House of Representatives, had touted the bill he spent weeks negotiating as a big victory for conservatives, although he faced a backlash from hard-liners on the right who said he made too many concessions on spending cuts.

On the other end of Pennsylvania Avenue, the vote was being touted as a major victory for Biden, who managed to protect almost all of his domestic priorities from deep cuts threatened by Republicans.

Agencies - Xinhua

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