US House passes debt limit bill to avert default

The US House on Wednesday overwhelmingly passed legislation negotiated by President Joe Biden and Speaker Kevin McCarthy to suspend the debt ceiling and set federal spending limits, as a broad bipartisan coalition lined up to cast a critical vote to pull the nation back from the brink of economic catastrophe.

The bill would defer the federal debt limit for two years — allowing the government to borrow unlimited sums as necessary to pay its obligations — while imposing two years of spending caps and a string of policy changes that Republicans demanded in exchange for allowing the country to avoid a disastrous default. The 314-117 vote came days before the nation was set to exhaust its borrowing limit.

With both far-right and hard-left lawmakers in revolt over the deal, it fell to a bipartisan coalition powered by Democrats to push the bill over the finish line. On the final vote, 149 Republicans and 165 Democrats backed the measure, while 71 Republicans and 46 Democrats opposed it.

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The deal would suspend the $31.4 trillion borrowing limit until January 2025. It would cut federal spending by $1.5 trillion over a decade, according to the Congressional Budget Office, by effectively freezing some funding that had been projected to increase next year and then limiting spending to 1 per cent growth in 2025, which is considered a cut because it would be at a lower level than inflation. The legislation would also impose stricter work requirements for food stamps; claw back some funding for IRS enforcement and unspent coronavirus relief money; speed the permitting of new energy projects; and officially end Biden’s student loan repayment freeze.

The compromise was structured with the aim of enticing votes from both parties. It allowed Republicans, who refused to raise the debt ceiling and avert a default without conditions, to say that they succeeded in reducing some federal spending, while allowing Democrats to say that they spared most domestic programs from the severe cuts.

In the Senate, both Democratic and Republican leaders said they would swiftly take up the legislation and push to get the package to Biden as quickly as possible, with Sen. Chuck Schumer, D-N.Y., the majority leader, warning that lawmakers would need to approve the bill without changes to meet the June 5 deadline when Treasury Secretary Janet Yellen has said the government would default without action by Congress.