US averts first-ever default with 11th-hour debt deal

Economy

Published: 2023-06-02 10:05

Last Updated: 2024-04-14 07:20


US averts first-ever default with 11th-hour debt deal
US averts first-ever default with 11th-hour debt deal

US senators voted to suspend the federal debt limit Thursday, capping weeks of fraught negotiations to eliminate the threat of a disastrous credit default just four days ahead of the deadline set by the Treasury.

Economists had warned the country could run out of money to pay its bills by Monday -- leaving almost no room for delays in enacting the Fiscal Responsibility Act, which extends the government's borrowing authority through 2024 while trimming federal spending.

Hammered out between Democratic President Joe Biden and the Republicans, the measure passed the Senate with a comfortable majority of 63 votes to 36 a day after it had sailed through the House of Representatives.

"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 said in a statement posted to social media.

He said he would sign the bill "as soon as possible" and address the nation Friday.

Democratic Senate Majority Leader Chuck Schumer added that the nation could "breathe a sigh of relief" after avoiding a "catastrophic" economic collapse.

"But, for all the ups and downs and twists and turns it took to get here, it is so good for this country that both parties have come together at last to avoid default," he said.

The bill -- which now heads to Biden's desk to be signed into law -- ended a day of intense back-and-forth between party leaders and rank-and-file members who had threatened the bill's quick passage with last-minute gripes about the detail.

Democratic leaders had spent months underlining the havoc that a first default in history would have wrought, including the loss of millions of jobs and USD 15 trillion in household wealth, as well as increased costs for mortgages and other borrowings.