After weeks of political impasse, tense negotiations and mounting economic anxiety, the Senate on Thursday (Jun 1) night gave final approval to bipartisan legislation suspending the debt limit and imposing new spending caps, sending it to President Joe Biden and ending the possibility of a calamitous government default.

The approval by the Senate on a 63-36 vote brought to a close a political showdown that began brewing as soon as Republicans narrowly won the House in November, promising to use their new majority and the threat of a default to try to extract spending and policy concessions from Biden.

Biden refused for months to engage with Speaker Kevin McCarthy, but finally did so after McCarthy managed in April to pass a GOP fiscal plan, spurring negotiations with the White House that produced the compromise last weekend.

On Thursday night, Biden cheered its passage, promising to sign it as soon as possible and address the nation from the Oval Office on Friday evening.

“Tonight, senators from both parties voted to protect the hard-earned economic progress we have made and prevent a first-ever default by the United States,” he said. “No one gets everything they want in a negotiation, but make no mistake: This bipartisan agreement is a big win for our economy and the American people.”

The agreement suspends the US$31.4 trillion debt limit until January 2025, allowing the government to borrow unlimited sums to pay its debts and ensuring that another fight will not occur before the next presidential election. It sets new spending levels that will be tested as Congress begins to write its annual spending bills. Other policy changes on energy project permitting and work requirements on social benefits were also included.

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“We saved the country from the scourge of default,” Sen Chuck Schumer, majority leader, exulted after the bill cleared Congress.

The Senate vote came after an afternoon of closed-door talks to resolve a last-minute flare-up over Pentagon funding, ignited by Republicans who said the debt-limit package severely underfunded the military. Senate leaders resolved the dispute with a formal statement that the debt-limit deal “does nothing to limit the Senate’s ability to appropriate emergency supplemental funds to ensure our military capabilities.”

The statement came after a day of uncertainty as a handful of Republican defence hawks complained that the deal – negotiated without input from the Senate – would underfund the military, and they demanded a commitment that their concerns would be addressed before it could be passed.

By evening, Senate officials and Republican Sen Lindsey Graham, who had been a chief critic of the Pentagon spending levels, said the pledge from the leadership was sufficient to reassure him and other critics sufficiently to back the bill, clearing the way for final votes.

“It does not fix this bill totally, but it is a march in the right direction,” Graham said.

Democrats contended that the entire debt-limit episode should have never occurred and that McCarthy should not be rewarded for using the nation’s economy as a hostage to win spending cuts. But they said the prospect of a default needed to be avoided at all costs.

“Defaulting on our national debt is unacceptable, unthinkable,” said Sen Dick Durbin, the No 2 Democrat, who accused McCarthy of a “careless and reckless” act. “We cannot let it occur.”

As in the House, Democrats carried the measure to passage in the Senate, with 44 of them and two independents joining 17 Republicans in support; 31 Republicans, four Democrats and one independent voted no.

The debt-limit agreement, which was approved overwhelmingly by the House on Wednesday night, increases Pentagon spending to US$886 billion for next year, a 3% rise. But Republican backers of higher spending for the military noted that that would not keep pace with inflation, and argued that the package fell far short of what was needed.

“To my House colleagues, I can’t believe you did this,” Graham said earlier in the day, accusing the architects of the measure of undercutting the military at a time of rising threats from Russia and China. “This budget is a win for China.”

Graham and others insisted, at a minimum, on a commitment that Congress would later act on an additional funding bill to beef up the spending, although this would in effect reduce the savings Republicans had hoped to achieve through their debt limit deal.

“We know that this budget is not adequate to the global threats that we face,” said Sen Susan Collins of Maine, the senior Republican on the full Appropriations Committee. “An emergency supplemental must be coming our way.”

The opposition erupted almost immediately after Schumer opened the Senate on Thursday morning by warning that the chamber needed to move quickly and make no changes to the agreement to clear it for Biden’s signature by Monday. He admonished lawmakers not to engage in brinkmanship before the so-called X-date of June 5, when Treasury Secretary Janet Yellen said the government would default without action by Congress.

“Time is a luxury the Senate does not have if we want to prevent default,” Schumer said. “June 5 is less than four days away. At this point, any needless delay or any last-minute holdups would be an unnecessary and even dangerous risk.”

Even as the deal migrated across the Capitol, the effects of the debt limit continued to pinch. The Treasury announced Thursday that it would delay auctions of three-month and six-month “bills” – short-term debt that the government no longer has room to take on until the borrowing cap is suspended.

As part of the deal to move forward with final votes on the bill, multiple senators secured votes on proposed changes. Schumer was determined to defeat all of them, as any alteration would force the measure back to the House, where no action would be likely to occur before the default deadline.

“Any change to this bill that forces us to send it back to the House would be entirely unacceptable,” he said. “It would almost guarantee default.” NYTIMES