A deal that heads off an unprecedented US financial default and begins the process of curbing the country’s spiralling debt was expected to clear a final legislative hurdle in the Senate today, just hours before the deadline.
President Barack Obama promised to sign the measure immediately.
The bill raises the current $14.3 trillion (€10tn) cap on US borrowing, which expires at midnight.
It cleared the House of Representatives last night by an unexpectedly easy margin. While there had been some suspense about the outcome in the lower house, the legislation’s backing from Senate Majority Leader Harry Reid and Republican leader Mitch McConnell virtually guarantees it will receive the 60 votes required when it comes to the floor of the upper chamber at noon (5pm Irish time)
The administration has said that without the new borrowing authority, the government could not pay all its bills. Administration officials say a default would ensue that would severely damage the global economy.
The bitterly fought legislation pairs a long-sought increase in the government’s borrowing cap with promises of more than $2tn of budget cuts over the upcoming decade.
In the minutes before the legislation won approval in the House, applause rang out through the lower chamber as Democratic Republican Gabrielle Giffords made a surprise and dramatic appearance on the House floor, her first since she was shot during a meeting with constituents at an Arizona shopping centre in January.
Giffords has been undergoing rehabilitation since she was gravely wounded by a gunshot that pierced her brain. She acknowledged her warm welcome, standing among well-wishing colleagues, raising her left hand to wave to fellow legislators. Her office said she had returned in support of the measure that was passed by the House.
The compromise deal deeply angered both conservative Republicans and liberal Democrats. Many Republicans contended the bill still would cut too little from federal spending; many Democrats said much too much. Still, Republican lawmakers supported the compromise, 174-66, while Democrats split, 95-95
Polls showed that Congress and President Obama have taken a sharp hit in US public opinion because of the prolonged battle over lifting the debt ceiling, something that past Congresses have done as a matter of course.
Without legislation in place by the end of today, the Treasury would run out of cash needed to pay investors in Treasury bonds, recipients of Social Security pension cheques, anyone relying on military veterans’ benefits and businesses that do work for the government.
Treasury Secretary Timothy Geithner told ABC News that he doesn’t know if the bruising debt-limit battle will harm America’s Triple-A credit rating, but says he fears “world confidence was damaged by this spectacle”.
Geithner told ABC that credit rating is “not my judgment to make”.
But he also said “this is, in some ways, a judgment on the capacity of Congress to act”.