Senate Approves Deal Raising Debt Ceiling, Averting U.S. Default
The Senate passed wide-ranging legislation Thursday that suspends the $31.4 trillion debt ceiling while cutting federal spending, backing a bipartisan deal struck by President Biden and House Speaker Kevin McCarthy to avert an unprecedented U.S. default. The 63-36 vote reflected support from both Democrats and Republicans, with backers saying the need to raise the nation’s borrowing limit outweighed concern about provisions related to military and domestic spending and energy policy, among other contentious issues. The measure now goes to the president for his signature with several days to spare before Monday, when the Treasury Department has said that the government will run out of money to pay all of its bills.
Biden thanked Senate leaders for the quick work and said he would sign the bill as soon as he can. “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,” he said. The bill’s passage closed out a relatively smooth final chapter in Congress’s efforts to tackle the debt ceiling after months of finger-pointing. Democrats accused Republicans of irresponsibly using the prospect of default to extort concessions, while Republicans countered that the nation’s growing debt called for decisive action, while also ruling out new taxes proposed by Biden.
Democrats control the chamber, 51-49, and the bill was backed by 46 members of the Democratic caucus and 17 Republicans, putting it over the 60 votes required for passage. One senator, Republican Bill Hagerty of Tennessee, was at his son’s high-school graduation ceremony and didn’t vote. “Democrats are feeling very good tonight,” said Senate Majority Leader Chuck Schumer (D., N.Y.). “We’ve saved the country from the scourge of default,” noting that far more Democrats than Republicans voted for the deal. Sen. John Barrasso (R., Wyo.), a member of GOP leadership who opposed the bill, said it “does not do enough to match the seriousness of the moment and the dangerous debt crisis our country is facing.” Senate Majority Leader Chuck Schumer after speaking to reporters Thursday following the vote on the debt deal. Photo: J. Scott Applewhite/Associated Press
The Treasury Department said in January that the nation had bumped up against the debt limit and started using extraordinary measures to keep the government solvent. Biden initially vowed that he wouldn’t negotiate on the debt ceiling, insisting that it be raised with no conditions attached. But talks between McCarthy, a California Republican, and the Democratic president kicked off in earnest last month after House Republicans surprised many Democrats by staying largely united to pass a bill proposing deep spending cuts and rolling back parts of Biden’s climate and tax agenda.
The Senate vote Thursday came after the House approved the measure late Wednesday. A strong majority of House Democrats and Republicans voted in favor of the bill, despite angry objections from conservatives that the measure didn’t do enough to control spending and protests from liberals about new work requirements. Under an agreement to allow the Senate to fast-track the vote, senators agreed to consider 11 amendments, related to issues including balancing the budget and a provision expediting the approval of the Mountain Valley Pipeline, a natural-gas pipeline. All were rejected, as leaders warned that passage of any of them would require the bill to be sent back to the House, which has already left town, and force a delay in passage.
The bill, the Fiscal Responsibility Act, would suspend the debt ceiling through Jan. 1, 2025, pushing the issue beyond the 2024 elections, in exchange for trims for unspecified domestic programs and a 3% cap on increases for military spending in fiscal 2024. It would provide $45 billion for a recently created program expanding coverage for veterans exposed to toxic burn pits, formally end a three-year freeze on student-loan payments, expedite large-scale energy and infrastructure projects, and raise to 54 the age at which able-bodied, low-income adults without dependents must work to receive food aid.
It doesn’t touch major programs such as Medicare, Medicaid and Social Security, showing how lawmakers are reluctant to address some of the biggest drivers of U.S. spending and have confined their fights to the narrow space of the discretionary budget, which accounts for almost a third of spending, leaving major programs off the table. The deal largely protects Biden’s legislative achievements of last year, with Republicans having little success in using the debt ceiling to dismantle his climate, tax and health law, the Inflation Reduction Act. But it also allows Republicans to point to spending cuts, given that spending caps are enforceable for fiscal years 2024 and 2025, and the party succeeded in clawing back some funding for the Internal Revenue Service and unspent Covid-19 money. The legislation would reduce government deficits by about $1.5 trillion over a decade compared with the baseline forecast, according to the Congressional Budget Office.
Because the U.S. consistently runs large annual deficits, the debt limit must regularly be addressed. Once the limit is reached, lawmakers must raise or suspend the ceiling before the Treasury Department can issue more debt.
The Treasury Department has been auctioning ultrashort-term debt in recent days, including $15 billion of one-day securities that settle Monday and mature Tuesday. The department has said it has enough space under the debt limit to issue these securities, as well as other longer-term ones, but warned that they might not generate enough cash to pay the government’s bills if the debt limit isn’t raised by Monday.
The Senate’s debate Thursday provided the clearest glimpse into tensions, particularly among Senate Republicans, that had been largely muffled. The negotiations were held primarily between McCarthy and Biden, with Senate Minority Leader Mitch McConnell (R., Ky.) staying out of the fray. Among the top concerns were those of defense hawks including Sen. Lindsey Graham (R., S.C.), who worried that the small increase in military spending would hamstring the Pentagon when the U.S. is on alert regarding the military threat posed by China, including the possibility of an invasion of Taiwan. “Please stop talking about confronting China when you’re dismantling the American Navy,” Graham said on the Senate floor.
Senators expressed concern about a provision in the debt bill that would force a 1% cut from fiscal 2023 levels if Congress doesn’t pass each of the 12 appropriations bills that allocate spending for different parts of the government by year’s end. Graham and GOP Sen. Susan Collins of Maine sought assurances that the Senate would seek to pass the 12 bills later this year, warning that any cuts to military spending would be dangerous. Graham sought a commitment from the two Senate leaders to advance a supplemental military spending bill to in effect get around the fiscal 2024 cap in military-spending increases.
Schumer said the Senate would seek “expeditious floor consideration” to pass the appropriations bills and avoid the 1% cut, asking Collins and Democratic Sen. Patty Murray of Washington, the vice chair and chair of the Appropriations Committee, respectively, to get the process of allocating funding started. He said that the Senate would respond to “emerging threats and needs,” and that the debt-ceiling bill doesn’t limit the chamber’s ability to enact supplemental spending bills. Collins and Murray voted for the debt-ceiling deal on final passage, while Graham voted against it.
The fight has reignited demands from some Democrats to defuse permanently the debt ceiling as a political weapon. In recent weeks, liberals said Biden had the power under the 14th Amendment of the Constitution, which says public debt authorized by law “shall not be questioned,” to unilaterally pay the nation’s debts. Biden has said that he was examining the matter but that it would face likely legal challenges. “We would be fools to allow this to happen again,” said Sen. Sheldon Whitehouse (D., R.I.). “Although this one ended well it got pretty scary and we really shouldn’t trust ourselves with these debt-limit votes.” Asked about the bill, Whitehouse said: “Beats the crap out of default.”
