In a race against time, the US House of Representatives has passed a measure to allow the US to borrow additional funds, averting a potential default on its debt. The vote count stood at 314-117, with some defections on both sides of the aisle. The bill now awaits a vote in the US Senate later this week, after which President Joe Biden can sign it into law. The government is projected to reach its borrowing limit on June 5, leaving little room for error as lawmakers strive to prevent a default on the $31.4tn (£25tn) debt, which underpins the global financial system.
Despite the division of power in Congress, with Republicans controlling the House and Democrats holding the majority in the Senate and the White House, reaching a deal had proven challenging until President Biden and House Speaker Kevin McCarthy achieved a bipartisan compromise over the weekend. The bill, spanning 99 pages, received approval from 165 Democrats and 149 Republicans in the House, surpassing the required simple majority.
Kevin McCarthy’s Strategic Approach and Challenges Within the Republican Party
House Speaker Kevin McCarthy employed a strategic approach by passing a bill that raised the debt limit but included conservative priorities, which pushed President Biden and hesitant Democrats to negotiate. Eventually, McCarthy reached a more modest agreement with the president, trimming the growth in federal spending and imposing new conditions on aid for low-income Americans. Some hard-line conservatives initially expressed dissatisfaction, even suggesting they would replace McCarthy as Speaker. However, by Wednesday, their opposition had dwindled, and a majority of Republicans supported McCarthy’s deal, revealing a lack of widespread support for the hard-liners’ position.
Provisions and Controversies Surrounding the Bill
The agreement suspends the debt ceiling until January 1, 2025. The Congressional Budget Office estimates that the legislation will result in $1.5tn in savings over the next decade. However, the bill faced opposition from lawmakers in both parties. Ultra-conservative Republicans argued that they secured insufficient concessions in exchange for raising the debt limit. Democrats objected to provisions that increased work requirements for federal food aid recipients and reinstated student loan repayments. Despite these objections, the bill advanced with support from political centrists on both sides of the aisle.
Senate Vote and Efforts to Prevent Default
The bill now heads to the Senate, where it will require a combination of Democratic and Republican votes for passage. Senator Mike Lee of Utah, a conservative Republican, has already threatened to use procedural tools to stall the consideration of the deal. On the other end of the spectrum, Senator Bernie Sanders, a left-wing Democrat, announced his opposition to the bill, stating that he cannot support it in good conscience. Both Democratic and Republican leaders in the Senate are working to ensure the bill reaches President Biden’s desk for his signature before the possibility of a default arises.
In 2011, the US faced a similar situation with its debt ceiling, resulting in a credit rating downgrade by Standard & Poor’s that remains in effect. As the recent vote approached, US stock markets experienced a slight decline, with the Dow closing 0.4% lower and the S&P and Nasdaq dipping by 0.6%.