US House passes debt ceiling deal as default threat looms | World News

Divided U.S. House passes bill to suspend $31.4 trillion debt ceiling Overcoming opposition from hard-line conservatives and averting a catastrophic default on Wednesday, with majorities backed by both Democrats and Republicans.

The Republican-controlled House of Representatives voted 314-117 to send the legislation to the Senate, which must enact the measure and send it to President Joe Biden’s desk by a Monday deadline when the federal government is expected to run out of money. pay its bills.

Biden wants to get the bill to his desk in time to avoid a default that paralyzes the U.S. economy and roils global financial markets.

The measure, a compromise between Biden and House Speaker Kevin McCarthy, was opposed by 71 hardline Republicans. That would normally be enough to block partisan legislation, but 165 Democrats backed the measure and pushed it through.

Republicans controlled the House with a narrow majority of 222 to 213.

The legislation suspends — essentially temporarily cancels — the federal government’s borrowing limits until Jan. 1, 2025. The timeline allows Biden and Congress to put political risk aside ahead of the November 2024 presidential election.

It will also limit some government spending for the next two years, speed up the permitting process for certain energy projects, recoup unspent COVID-19 funds and expand work requirements for food assistance programs to more recipients.

Hardline Republicans had hoped for further spending cuts and tougher reforms.

“At best, we have a two-year spending freeze full of loopholes and gimmicks,” said Representative Chip Roy, a key member of the hardline House Freedom Caucus.

Progressive Democrats — who joined Biden in refusing to negotiate the debt ceiling — opposed the bill for several reasons, including new job requirements for some federal anti-poverty programs.

“Republicans are forcing us to decide which vulnerable Americans get to eat, or they’ll make us default. It’s just plain wrong,” Representative Jim McGovern, a Democrat, said Wednesday.

Late Tuesday, the nonpartisan Congressional Budget Office said the legislation would save $1.5 trillion over a decade. That’s below the $4.8 trillion savings goal Republicans set in a bill that passed the House in April and the $3 trillion that Biden’s proposed budget would cut through new taxes over that period. deficit.

In the Senate, leaders of both parties have said they hope to move to pass the legislation by the weekend. But a potential delay in the amendment vote could complicate matters.

Republicans said Senate Majority Leader Chuck Schumer and Senate Minority Leader Mitch McConnell may need to allow a vote on the GOP amendment to ensure swift action.

But Schumer appeared to rule out an amendment on Wednesday, telling reporters: “We can’t send anything back to the House, plain and simple. We have to avoid default.”

Debates and votes in the Senate could continue into the weekend, especially if any of the 100 senators try to delay passage.

Sen. Rand Paul, a hardline Republican who has long been known for delaying important Senate votes, said he would not block passage if he were allowed to introduce the amendment for a full vote.

Sen. Bernie Sanders, a progressive independent who caucuses with Democrats, said he would oppose the bill because it includes an energy pipeline and additional job requirements. “In good conscience, I cannot vote for a debt ceiling deal,” Sanders tweeted.

To the Republicans’ victory, the bill would divert some money from the IRS, although the White House said it should not weaken tax enforcement.

Biden could also point to gains.

The deal leaves his signature infrastructure and green energy laws largely intact, with spending cuts and job requirements well below Republicans’ demands.

Republicans argue that deep spending cuts are necessary to stem the growth of the national debt, which stands at $31.4 trillion, roughly equal to the economy’s annual output.

Interest payments on these debts are expected to take up an increasing share of the budget as an aging population drives up healthcare and retirement costs, according to government forecasts. The deal won’t do anything to rein in those fast-growing projects.

Much of the saving will be achieved by limiting spending on domestic items such as housing, education, scientific research and other forms of “discretionary” spending. Military spending will be allowed to increase over the next two years.

The impasse over the debt ceiling prompted ratings agencies to warn they could downgrade the U.S. debt that underpins the global financial system.

Credit rating agency DBRS Morningstar reviewed the US for a possible downgrade last week, echoing similar warnings from Fitch, Moody’s and Scope Ratings. Another agency, S&P Global, downgraded US debt after a similar debt-ceiling standoff in 2011.

The last time the U.S. was this close to default was in 2011, when Washington was divided along a similar partisan divide, with a Democratic president and Senate majority and a Republican majority in the House.