US Debt Ceiling Bill Advances Toward Tight Vote in House

SOVEREIGN DEBT - WASHINGTON. A bill to suspend the U.S. government's $31.4 trillion debt ceiling and avert a disastrous default cleared a key procedural hurdle in the House of Representatives on Wednesday, setting the stage for an vote on the bipartisan debt deal itself.

Republicans control the House by a narrow 222-213 majority. But the deal will need support from both Speaker Kevin McCarthy's Republicans and President Joe Biden's Democrats to pass, as members of both parties object to significant parts of the legislation.

The procedural vote, which allows for the start of debate and then a vote on the bill itself, passed by a vote of 241-187, with 52 Democrats needed to overcome the opposition of 29 Republicans.

McCarthy predicted that the next vote, expected around 8:30 p.m. (0030 GMT), would succeed, telling reporters: "It's going to become law."

The legislation would suspend the U.S. debt ceiling through Jan. 1, 2025, meaning that there would not be a limit until that date, allowing Biden and lawmakers to set aside the politically risky issue until after the November 2024 presidential election.

It would also cap some government spending over the next two years, speed up the permitting process for some energy projects, claw back unused COVID-19 funds, and expand work requirements for food aid programs to additional recipients.

Biden expects to have the legislation on his desk by a June 5 deadline, when the federal government could run out of money to pay its bills, the White House said.

A successful House vote would send the bill first to the Senate, where there could be a danger of delay unless Senate Majority Leader Chuck Schumer and Republican leader Mitch McConnell agree to fast-track the legislation.

Republicans want Schumer to allow amendment votes in exchange for quick action. But Schumer appeared to rule out amendments on Wednesday, telling reporters: "We cannot send anything back to the House, plain and simple. We must avoid default."

The Treasury Department has warned that it will not be able to cover all the government's obligations by Monday if Congress does not raise the limit.

During Tuesday's debate in the House Rules Committee, hardline Republican Representative Chip Roy complained that the greater budget savings many conservatives had hoped for had not been achieved.

"How on Earth is this going to be beneficial?" Roy asked.

Late on Tuesday, the non-partisan Congressional Budget Office said the legislation would result in $1.5 trillion in savings over a decade.

Senate debate and voting could stretch into the weekend, especially if any one of the 100 senators tries to slow passage.

SENATORS FIRM UP POSITIONS

Hardline Republican Senator Rand Paul, long known to delay Senate votes, has said he would not hold up passage if allowed to offer an amendment for a floor vote.

Senator Bernie Sanders, a progressive independent who caucuses with the Democrats, said that he would vote against the bill due inclusion of an energy pipeline and extra work requirements. "I cannot, in good conscience, vote for the debt ceiling deal," Sanders said on Twitter.

White House Budget Director Shalanda Young, who was one of Biden's lead negotiators, urged Congress to pass the bill.

"I want to be clear: This agreement represents a compromise, which means no one gets everything that they want and hard choices had to be made," Young told a news conference.

In a win for Republicans, the bill would shift some funding away from the Internal Revenue Service, although the White House says that should not undercut tax enforcement.

Biden can point to gains as well.

The deal leaves Biden's signature infrastructure and green-energy laws largely intact, and the spending cuts and work requirements are far less than Republicans had sought.

Republicans have argued that steep spending cuts are necessary to curb the growth of the national debt, which at $31.4 trillion is roughly equal to the annual output of the economy.

Interest payments on that debt are projected to eat up a growing share of the budget as an aging population pushes up health and retirement costs, according to government forecasts. The deal would not do anything to rein in those fast-growing programs.

Most of the savings would come by capping spending on domestic programs like housing, education, scientific research and other forms of "discretionary" spending. Military spending would be allowed to increase over the next two years.

The debt-ceiling standoff prompted ratings agencies to warn that they might downgrade U.S. debt, which underpins the global financial system.

The last time the U.S. came this close to default was in 2011, a time of similar partisan divide in Washington, with a Democratic president and Senate majority and a Republican-majority House.