Senate Passes Debt Ceiling Bill to Avoid U.S. Default

The U.S. Senate passed The Fiscal Responsibility Act of 2023 late Thursday in a bipartisan 63 to 36 vote to avert a default by the U.S. government.

The Senate passed the bill suspending the $31.4 trillion debt ceiling until early 2025. The legislation makes certain cuts in discretionary spending, rescinds unobligated funds and expands work requirements for some federal programs.

The House of Representatives passed the bill late Wednesday by a vote of 314 to 117 after weeks of negotiations between President Joe Biden and House Speaker Kevin McCarthy, R-California. The bill now moves to Biden for his signature into law before the June 5 date by which the Department of the Treasury said the government could no longer pay its bills if an agreement was not reached.

“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,” Biden posted on Twitter shortly after the vote.

On Thursday, the Senate worked out an agreement to fast-track the vote by sidestepping 11 various amendments brought to the floor. The amendment attempts included calls for a balanced budget, expedited approval of a natural-gas pipeline project known as the Mountain Valley Pipeline and increased funding for the Department of Defense due to the perceived threats of China and ongoing support of Ukraine in the war against Russia.

“Defaulting on our national debt is unacceptable, unthinkable—we cannot let it occur,” Senate Majority Whip Dick Durbin, D-Illinois, said on the Senate floor ahead of the vote. “So as painful as some of the decisions that will come from this agreement being reached are, they are virtually, at this point, inevitable to avoid default on our debt.”

The bill agrees to suspend the debt ceiling through January 1, 2025, in exchange for cuts to discretionary items to be worked out later and a 3% cap on boosts to military spending in fiscal 2024. It also ends a three-year freeze on student-loan payments that has led to a debate both in Congress and across the country. In addition, the legislation speeds up energy and infrastructure projects and raises to 54 the age that low-income earners without dependents must work to receive food aid.

“Default was the giant sword hanging over America’s head,” Senate Majority Leader Chuck Schumer, D-New York, said at a press conference after the bill passed. “Tonight’s news is very good news for our economy and for American families.”

With the debt ceiling crisis averted, Congress will turn to other matters, including calls for further clarity of SECURE 2.0 retirement legislation going into effect in 2024. This week, the Senate Committee on Health, Education, Labor and Pensions issued a letter urging the Department of Labor to prioritize implementation of certain provisions in the SECURE 2.0 Act of 2022, including those regarding employer ownership, defined benefit annual funding notices and emergency savings.

Meanwhile, the nomination of Julie Su for Secretary of Labor, a post she is currently filling on an acting basis, is still pending but has been approved by the HELP Committee.