Senate Majority Leader Charles Schumer, DN.Y., holds a news conference after the senate luncheon at the U.S. Capitol on Tuesday, May 2, 2023.
Tom Williams | Cq-roll Call, Inc. | Getty Images
WASHINGTON — The Senate late Thursday passed a House-approved bill to raise the debt ceiling and limit government spending for two years, sending the legislation to President Joe Biden’s desk.
He is expected to sign it on Friday and address the country at 7 pm ET, just three days before the US risks its first sovereign debt default.
“No one gets everything they want in a negotiation, but make no mistake: This bipartisan agreement is a huge win for our economy and the American people,” Biden said in a statement after the vote.
Stock futures rose slightly on Thursday night as the US avoided potential economic turmoil.
The compromise debt ceiling bill passed the Senate by a 63-36 margin, enough support from Democrats and Republicans to overcome the chamber’s 60-vote threshold to avoid a filibuster.
But the destruction of the party was uneven. The majority of Senate Republicans, 31 senators, voted against the debt ceiling bill, while only 17 GOP senators supported it. On the left, only four Democrats and Vermont independent Sen. Bernie Sanders voted to kill the bill, while the other 46 members of the Democratic caucus voted for it.
The vote was the final chapter in a remarkable day of deal-making and quick voting in the Senate, a body that typically takes days, not hours, to debate and amend House proposals.
On Thursday night, the chamber voted on 11 proposed amendments to Fiscal Responsibility Act passed by the House, before finally passing the bill itself. In exchange for agreeing to put their amendments up for a vote, some senators with serious objections to parts of the bill agreed not to delay the legislation with procedural hold ups.
The driving force behind the turbo votes is simple: The Treasury Department’s June 5 deadline for raising or suspending the debt ceiling is four days away.
Secretary Janet Yellen believes the government is unlikely to meet its debt obligation after Monday, unless Congress votes to raise the debt limit.
Following the Senate vote, Yellen praised the legislation, saying it “protects the full faith and credit of the United States and preserves our financial leadership, which is essential to our economic growth and stability.”
Investors and market analysts watched the month-long debt ceiling drama play out with increasing apprehension, as the clock ticked down to the final weeks before a potential US debt default, with no deal still in place.
In a statement after Thursday’s vote, Moody’s said the resolution of the debt ceiling crisis was in line with its expectations, and indicated it was not considering a downgrade of the US debt.
“The stable outlook on the US’s Aaa sovereign credit rating reflects expectations,” said William Foster, senior vice president at Moody’s Investors Service.
(LR) US President Joe Biden, Speaker of the House Kevin McCarthy, Republican of California, leave after the annual Friends of Ireland luncheon in St. Patrick’s Day at the US Capitol in Washington, DC, on March 17, 2023.
Andrew Caballero-Reynolds | AFP | Getty Images
The bill that passed the Senate on Thursday was the product of intense, and sometimes bitter, negotiations between allies of House Speaker Kevin McCarthy and the White House. The final deal gave conservatives some ideological policy gains in exchange for their votes to raise the debt ceiling after next year’s presidential election and in 2025.
Both Biden and McCarthy claimed the outcome as a victory: McCarthy, because he passed new work requirements for some federal aid, a two-year cap on government spending, and a clawback of unspent COVID funds .
White House reaction to the bill’s progress through Congress this week has been more subdued, but insiders say it’s a deliberate tactic to avoid alienating Republicans whose votes are needed to pass. the law.
The bill moved through the House in about 72 hours, and passed Wednesday night with a resounding majority, 314-117.
In the end, however, more House Democrats voted for the bill than Republicans, despite the fact that the bill was conceived by House GOP leadership.
In the Senate, the final vote will be partisan, but it won’t be an easy lift.
Majority Leader Chuck Schumer spent most of the day Thursday hammering out a deal with a group of Senate Republicans who demanded that he pledge to support a supplemental defense funding bill before they agreed to -fast-track the debt ceiling bill.
The current House debt bill provides $886 billion in defense spending for fiscal year 2024, an increase of 3% year over year. That number rises to $895 billion in 2025, an increase of 1%.
But GOP Sen. Susan Collins of Maine called that “spectacularly inadequate” on Thursday, arguing that the 1% increase hasn’t kept pace with inflation, so in practical terms, it’s actually a decrease in military funding. The solution came in the form of a rare joint statement from Schumer and Senate Minority Leader Mitch McConnell, R-Ky., that was read on the floor.
“This debt agreement does nothing to limit the Senate’s ability to appropriate emergency supplemental funds to ensure our military capabilities are sufficient to deter China, Russia and our other adversaries and respond to ongoing and growing national security threats,” Schumer read. “This debt ceiling also does not limit the ability of the Senate to appropriate emergency supplemental funds and respond to various national issues, such as disaster relief, combating the fentanyl crisis or others more issues of national importance,” Schumer said.
The majority leader’s message is unmistakable: Regardless of what the bill says, the Senate continues to spend money above and beyond that to fund what its members believe is important.
With the debt ceiling crisis averted, Congress now turns its eyes to a summer of appropriations, haggling over how to spend their limited amounts of money next year.