Wednesday, a divided U.S. House of Representatives passed a bill to suspend the $31.4 trillion debt ceiling with majority support from Democrats and Republicans to surmount opposition from hardline conservatives and prevent a catastrophic default.
The Republican-controlled House voted 314-117 to send the bill to the Senate, which must pass it and deliver it to President Joe Biden's desk by Monday when the government is expected to run out of money to pay its obligations.
"This agreement is good news for the American people and the American economy," Biden said following the vote. "I strongly urge the Senate to pass it as quickly as possible so that I can sign it into law."
The measure, which was a compromise between Vice President Biden and House Speaker Kevin McCarthy, was opposed by 71 conservative Republicans. Normally, this would be sufficient to block partisan legislation, but 165 Democrats - more than the 149 Republicans who supported the measure - voted for it and pushed it through.
Republicans control the House by a razor-thin margin of 222-213.
The legislation suspends, or effectively removes temporarily, the federal government's borrowing limit until January 1, 2025. The timeline permits Biden and Congress to table the politically hazardous issue until after the presidential election in November 2024.
In addition, it would limit some government spending over the next two years, expedite the approval process for certain energy projects, recover unused COVID-19 funds, and expand work requirements for food assistance programs to include more recipients.
Conservative Republicans desired deeper expenditure cuts and stricter reforms.
Representative Chip Roy, a prominent member of the conservative House Freedom Caucus, stated, "At best, we have a two-year spending freeze full of loopholes and gimmicks."
Progressive Democrats oppose the measure for a number of reasons, including the addition of work requirements to some federal anti-poverty programs.
"Republicans are compelling us to choose which vulnerable Americans will receive food, or they will force us into insolvency. On Wednesday, Democratic Representative Jim McGovern stated categorically that it was incorrect.
The nonpartisan Congressional Budget Office reported late Tuesday that the legislation would save $1.5 trillion over a decade. This is less than the $4.8 trillion in savings Republicans aimed for with the bill passed through the House in April and less than the $3 trillion deficit Biden's proposed budget would have reduced through new taxes over the same time.
Senate Up Next
The leaders of both parties in the Senate expressed optimism that the legislation would be passed before the weekend. However, a potential delay in voting on amendments could complicate matters.
To assure swift action, Senate Majority Leader Chuck Schumer and Senate Minority Leader Mitch McConnell may need to allow votes on Republican amendments, according to Republicans.
However, Schumer appeared to rule out amendments on Wednesday, telling reporters, "We cannot send anything back to the House, period." We must avert default."
Deliberation and voting in the Senate could extend into the weekend, particularly if any of the 100 senators attempt to obstruct passage.
Hardline Senator Rand Paul, who has a history of postponing crucial Senate votes, has stated that he would not delay passage if permitted to submit an amendment for a vote.
Senator Bernie Sanders, a progressive independent who caucuses with the Democrats, stated that he would vote against the measure due to the inclusion of an energy pipeline and additional work requirements. Sanders tweeted, "I cannot vote for the debt ceiling deal in good conscience."
In a victory for the Republicans, the measure would remove some funding from the Internal Revenue Service, despite the White House's assertion that this should not compromise tax enforcement.
Biden can also point to accomplishments.
The agreement leaves his signature infrastructure and green-energy policies intact, and the spending cuts and work requirements are significantly less than the Republicans desired.
Republicans have argued that drastic expenditure cuts are required to stem the growth of the national debt, which, at $31.4 trillion, is roughly equivalent to the economy's annual output.
According to government projections, interest payments on this debt will consume a growing portion of the budget as an aging population drives up health and retirement costs. The agreement would not affect these rapidly expanding programs.
Most savings would be generated by capping domestic programs such as housing, education, scientific research, and other "discretionary" expenditures. Spending on the military would be permitted to increase over the next two years.
The impasse over the debt ceiling prompted rating agencies to issue a warning that they may downgrade U.S. debt, which supports the global financial system.
The United States was placed on review for a probable downgrade by DBRS Morningstar last week, echoing similar warnings by Fitch, Moody's, and Scope Ratings.
S&P Global downgraded U.S. debt after a similar debt-ceiling impasse in 2011 during a similar partisan split with a Democratic president and Senate majority and a Republican House majority.