The US Congress on Thursday suspended the country’s debt ceiling until May, giving lawmakers three months for high-stakes budget negotiations and averting a potentially catastrophic default.
The Senate voted 64 to 34 in favour of the bill, which had already passed in the House of Representatives last week, authorising the government to exceed the legal borrowing limit until May 18 as Democrats and Republicans struggle to reach a broader deal to rein in deficits and the federal debt.
The United States exceeded its congressionally mandated $16 trillion borrowing limit late last month, and the Treasury has taken extraordinary measures to keep paying the government’s bills through late February.
Top Senate Democrat Harry Reid, speaking ahead of the vote, urged his colleagues to cast ballots for the bill, saying the short-term solution was better than nothing.
“Raising the possibility that the US could default on its obligations every few months is not an ideal way to run a government. But a short-term solution is better than another imminent, manufactured crisis,” he said.
“I would remind my Republican colleagues that most of them voted to incur the debts now coming due. And suspending the debt limit won’t authorise a penny of new spending – but it will ensure we pay the bills we’ve already incurred,” he added.
Eleven Republicans voted with Democrats to pass the bill.
But Republican Minority Leader Mitch McConnell did not vote and said ahead of the vote that the government needs to cut spending, not borrow more.
“But the President seems content to simply double down on more of the same. He wants to spend more, which would only worsen our trillion-dollar deficits.”
Republicans had earlier sought to tether an extension of the debt ceiling to spending cuts. But that stance threatened a repeat of last summer’s tense standoff and elevated the risk of a potentially catastrophic default.
A showdown in 2011 over the debt limit led to the unprecedented decision by Standard & Poor’s to downgrade the once-sterling US credit rating.
Under the bill, which must still be signed by the president, the debt limit will automatically reset on May 19 to the amount the government has borrowed, leaving Democrats and Republicans the next three months to forge an agreement on the budget for 2013 and beyond.
Lawmakers agreed on taxes after marathon negotiations late last month to avoid the so-called fiscal cliff on Jan 1, when taxes were due to rise on all Americans and massive automatic spending cuts were to kick in, had Congress failed to act.
But the agreement delayed until March any deal on spending cuts set to hit defense and domestic programs.
The question of government spending and the deficit continues to divide Washington.
Republicans, already frustrated that the issue was not addressed in the fiscal cliff agreement, have called for major budget cuts, notably in social programs including Social Security – a government pension program – and Medicare and Medicaid – health insurance for seniors and the needy.
In a bid to hasten action, House Republicans added a clause to the bill to keep senators from collecting their salaries if they don’t pass a budget by April 15.