The political crisis over the U.S. debt ceiling is all but over after the Senate passed legislation to raise the American government’s debt limit, averting what would have been a costly default for the world’s biggest economy.
The legislation has now been approved in both chambers of Congress and goes to U.S. President Joe Biden who is expected to sign it into law later today (June 2).
The bill to lift the U.S. debt limit follows month of political wrangling in Washington, D.C. and comes just three days before the U.S. was to default on its sovereign debt for the very first time, a development that could have sent the global economy and stock markets into a tailspin.
The debt limit bill passed the Senate with a vote of 63-36, enough support from Democrats and Republicans to overcome the chamber’s 60-vote threshold and avoid a filibuster.
Most Senate Republicans (31) voted against the legislation, while just 17 conservative senators supported it. On the left, only four Democrats and Vermont independent Bernie Sanders voted against the bill, while the other 46 members of the Democratic party supported it.
The Senate vote was the final chapter for the debt ceiling standoff and occurred remarkably quick given that it normally takes several days for the upper chamber to pass legislation.
The U.S. Treasury Department had set a June 5 deadline to raise the debt limit or risk the federal government being unable to pay its bills, debts, and other obligations.
The legislation raises the U.S. debt ceiling for two years, avoiding any further political jousting over it until after the 2024 presidential election.
Moody’s credit rating agency issued a statement reaffirming the U.S. government’s ‘AAA’ standing and said that it is not considering a downgrade of U.S. debt.
U.S. stock markets are up across the board after the Senate passed the debt limit legislation, with the benchmark S&P 500 index rising 0.46%.
