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US debt ceiling deal passes through the House of Representatives

Joe Biden - Michael Reynolds/EPA
Joe Biden - Michael Reynolds/EPA

The House of Representatives overwhelmingly voted to suspend the debt ceiling limit on Wednesday night, averting a catastrophic default and allowing Joe Biden to breathe a sigh of relief.

The deal – hammered out by the US president and the Republican House Speaker Kevin McCarthy – will now move to the Senate.

The measure must be passed and signed into law by Monday to avoid the US defaulting on its debt for the first time in its history.

After days of fraught negotiations, a bipartisan coalition of 314 Republicans and Democrats voted to pass the Biden-McCarthy deal on Wednesday night.

It cleared the required threshold of 218 votes despite a revolt by the Republican Party’s right flank and stiff opposition from progressive Democrats.

The deal suspends the $31.4 trillion US debt ceiling until Jan 1, 2025 – in essence, temporarily removing the federal government’s borrowing limit.

But it would also cap some non-defence government spending for two years and enact policy changes including green-lighting energy projects and expanding work requirements for welfare programmes that Republicans demanded in return.

There were 149 Republicans and 165 Democrats who voted for the bill and 71 Republicans and 46 Democrats who voted against it.

Mr Biden hailed the vote as a “critical step” to protecting the country from economic catastrophe.

In a nod to the tense negotiations surrounding the deal, the president said: “This budget agreement is a bipartisan compromise. Neither side got everything it wanted. That’s the responsibility of governing.”

Mr McCarthy also hailed the vote as a “crucial first step for putting America back on track”.

The measure delays the politically risky issue of the debt ceiling until after the next presidential election.

However, the drama playing out on Capitol Hill continues as the legislation now heads to the Senate – where Democrats have a 51-49 majority. It requires 60 votes to pass.

Chuck Schumer, the Democratic majority leader, has vowed to move quickly to pass the bill and senior Republicans are confident there will be at least nine Republicans to support the bill.

But the chamber’s system of unanimous consent means that any one senator can delay proceedings. It is not yet clear when a final vote will take place.

The chamber must now complete the high-wire act of clearing procedural hurdles, voting the measure through and sending it to Mr Biden’s desk before Monday, when the US Treasury is expecting to run out of the money.

“The consequences of slipping past the deadline would reverberate across the world and take years to recover from,” Mr Schumer said.

“Remember, a default would almost certainly trigger another recession, send costs soaring, kill millions of jobs - hardworking people thrown out of work through no fault of their own.”