The Senate passed a bill on Thursday evening, which had previously been approved by the House, to raise the debt ceiling and establish a cap on government spending for a two-year period. The legislation is now on its way to President Joe Biden, and he is expected to sign it on Friday. In his statement following the vote, Biden emphasized that while no one gets everything they want in a negotiation, this agreement is a significant victory for the American economy and its citizens.
The approved House bill allocated $886 billion for defense spending in fiscal year 2024, representing a 3% increase compared to the previous year. This figure would rise to $895 billion in 2025, a 1% increase.
The bill to raise the debt ceiling obtained sufficient support from both Democrats and Republicans in the Senate, surpassing the necessary 60-vote threshold to avoid a filibuster, with a final vote count of 63-36. The majority of Senate Republicans (31 senators) voted against the bill, while 17 GOP senators supported it. Among Democrats, four senators, along with Vermont independent Senator Bernie Sanders, voted against the bill, while the remaining 46 members of the Democratic caucus voted in favor of it.
The Senate’s rapid voting and deal-making on this day marked a departure from its usual deliberative process. Typically, the Senate requires several days to consider and amend House bills, but due to the impending June 5 deadline set by the Treasury Department to raise or suspend the debt ceiling, time was of the essence. Treasury Secretary Janet Yellen had warned that without congressional action, the government would likely be unable to meet its debt obligations after Monday.
Following the Senate’s approval, Yellen commended the legislation, stating that it safeguards the United States’ full faith and credit, preserving its financial leadership, which is crucial for economic growth and stability.
Throughout the month-long debt ceiling saga, investors and market analysts had watched with growing concern as the deadline for a potential U.S. debt default drew closer without a resolution in sight. Moody’s, in response to the Senate vote, stated that the debt ceiling crisis resolution aligned with its expectations and indicated that it had no plans to downgrade U.S. debt.