US debt ceiling bill passes crucial vote in House of Representatives just days before default deadline

A bill to suspend the US debt ceiling and avoid a default that could have been economically catastrophic has been approved by the House of Representatives in a crucial vote.

The bipartisan bill to suspend the government’s $31.4 trillion debt ceiling was voted on just five days before the deadline to avoid a crippling default. It will now go to the Democratic-majority Senate.

“This agreement is good news for the American people and the American economy,” US President Joe Biden said, and urged the Senate to “pass it as quickly as possible” so that he can sign it into law.

The debt ceiling – also known as the debt limit – is the maximum amount of money the US can borrow to pay its bills, from social security and Medicare benefits, to military salaries and interest payments on outstanding national debt.

The current US debt ceiling is $31.4trn, and the government hit that borrowing limit in January. Treasury secretary Janet Yellen had warned that the government would not be able to pay its bill from next Monday – 5 June – unless the debt ceiling was raised.

If the US were to miss a payment on its obligations it could have triggered a “cataclysmic” Wall Street meltdown of historic proportions.

The new timeframe for raising the debt ceiling allows Mr Biden and Congress to set aside the contentious issue until after the November 2024 presidential election.

The bill would also cap some government spending over the next two years, speed up the permitting process for certain energy projects, claw back unused Covid-19 funds and expand work requirements for food aid programmes to additional recipients.

Hardline Republicans had wanted deeper spending cuts and more stringent reforms. Representative Chip Roy said: “At best, we have a two-year spending freeze that’s full of loopholes and gimmicks.”

But some Democrats also opposed it for reasons including new work requirements from some federal anti-poverty programs.

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

Senator Bernie Sanders, a progressive independent, had said he would vote no to the bill due to inclusion of an energy pipeline and extra work requirements. “I cannot, in good conscience, vote for the debt ceiling deal,” he wrote on Twitter.

Senate debate and voting could stretch into the weekend, especially if any one of the 100 senators tries to slow passage.