The U.S. Senate passed the debt ceiling agreement—the Fiscal Responsibility Act—with a vote of 63-36, preventing the nation’s first-ever default. The bill will now head to President Joe Biden’s desk for signing.
The agreement, crafted by Biden, House Speaker Kevin McCarthy (R-Calif.), and their teams of negotiators, suspends the debt limit through Jan. 1, 2025, and imposes caps on defense and non-defense discretionary spending enforced by sequestration.
At the beginning of the session, Senate Majority Leader Chuck Schumer (D-N.Y.) warned against delaying the bill with amendments, saying on the Senate floor that this was not an option.
“That would risk default, plain and simple. Both sides have just locked in an agreement that enables the Senate to pass legislation tonight that avoids default,” he said. “America can breathe a sigh of relief because, in this process, we are avoiding default. Let’s finish the job and send this very important bipartisan bill to the president’s desk tonight.”
But lawmakers had introduced 11 amendments to the debt ceiling bill.
Sen. Tim Kaine (D-Va.) suggested eliminating the approval of the Mountain Valley Pipeline from the Fiscal Responsibility Act because it did not have any relation to the debt ceiling. His amendment failed in a 69-30 vote.
Sen. John Kennedy (R-La.) submitted the final amendment of the evening that required states to use the most up-to-date unemployment data for waivers of food stamp work requirements, which also failed by a voice vote.
GOP and Democratic leaders aimed to keep the Biden-McCarthy package intact to ensure swift passage without any more hurdles to overcome.
Meanwhile, several conservative senators had expressed discontent throughout the day over the bill.
Sen. Rand Paul (R-Ky.), who proposed a “conservative alternative” to the Biden-McCarthy plan on May 30, told The Epoch Times that “there aren’t enough conservatives in the Senate” to enact fiscal reforms.
“I think the majority of people in the United States, as evidenced by multiple polls, would like to have significant fiscal reform before raising the debt ceiling,” he said.
A recent CNN poll found that 60 percent of Americans want spending cuts attached to a debt ceiling increase.
Sen. Mike Lee (R-Utah) told reporters on Capitol Hill that House Republicans are trying to make the fiscal package appear that “it does more than it does.”
“Mark my words, when all is said and done on this, when we look back on this a year, two years from now, this will not have saved anything, not a dime. It probably would have cost us more,” he said.
Sen. Bernie Sanders (I-Vt.) confirmed on May 30 that he would not vote for the debt ceiling deal, calling it “totally unnecessary.”
Senator Marsha Blackburn (R-Tenn.) believes the deal will not adequately address “wasteful spending and government overreach.”
“Joe Biden’s offer was a debt ceiling increase with new taxes and without spending cuts, and I commend Speaker McCarthy for fighting back against Biden’s blank check agenda,” Blackburnsaid in a statement.
“No one wants the government to default on our debt, however, I do not believe that the final deal will put enough restraints on Biden’s wasteful spending and government overreach. This deal also does nothing to stop 87,000 IRS agents from harassing hardworking Americans. Furthermore, we should invest in a strong military at a rate that ensures we are fully equipped to take on the Chinese Communist Party.”
However, GOP leaders have insisted that the fight to restore fiscal discipline in the nation’s capital is just getting started, with the debt limit deal being the first step.
Since the Biden-McCarthy debt limit proposal was announced during the Memorial Day long weekend, the bill has traveled through Congress at a rapid pace.
It first cleared a key hurdle in the House Rules Committee, allowing the package to go to the House floor for a debate and vote. The Fiscal Responsibility Act then passed the House with a vote of 314 to 117. Seventy-one Republicans and 46 Democrats voted against the bill.
After passing in the upper chamber, the legislation will head to the president’s desk. He is expected to sign it as soon as possible to avert the nation defaulting on its debt.
Lawmakers approved the legislation ahead of Treasury Secretary Janet Yellen’s June 5 deadline. She had previously raised the default date from the previous June 1 estimate.
The agreement comes as the Department’s cash balance has been shrinking. The Treasury General Account closing balance for May 31 was $48.512 billion, down from $316.381 billion at the start of the month, according to the Daily Treasury Statement.
In overnight trading, the leading benchmark indexes were little changed after the Senate approved the bill.
The U.S. financial markets have ostensibly moved on from the debt ceiling drama now that the threat of default is off the table. Economists and market analysts warned that defaulting on the nation’s debt would have triggered an enormous shock, sending the country into a recession and creating job losses.
Treasury yields were stable in after-hours trading and heading into the Senate vote. The benchmark 10-year yield climbed above 3.61 percent. The 1-month bill added more than 14 basis points to 5.245 percent, while the 1-year bill picked up 3.4 basis points to 5.176 percent.
Investors have renewed their focus on the upcoming Federal Reserve policy meeting. Traders anticipate that the Federal Open Market Committee (FOMC) will vote to hit the pause button on rate hikes and leave the policy rate in a range of 5.00 and 5.25 percent.
The two-day FOMC policy meeting will be held on June 13 and 14.