WASHINGTON — Congress passed must-do legislation today to permit the government to borrow hundreds of billions of dollars more to meet its obligations, averting a first-ever government default that had loomed as early as mid-February.
The 64-34 vote in the Democratic-controlled Senate sent the measure to President Obama, who has said he will sign it. The Republican-led House passed the legislation last week.
The legislation would temporarily suspend the $16.4 trillion limit on federal borrowing, which experts say would allow the government to borrow about $450 billion to meet interest payments and obligations like Social Security benefits and government salaries.
The deadline for Congress to act again to prevent default would likely not come until August, according to calculations by the Bipartisan Policy Center, a Washington-based think tank.
Without the bill, the Treasury Department says, the government would default on its obligations by as early as mid-February.
“Failure to pass this bill will set off an unpredictable financial panic that would plunge not only the United States, but much of the world, back into recession,” said Sen. Max Baucus (D., Mont.). “Every single American would feel the economic impact.”
The short-term increase in the borrowing limit was the brainchild of House Republicans, who wanted to re-sequence a series of upcoming budget battles, taking the threat of a potentially devastating government default off the table and instead setting up a clash in March over automatic across-the-board spending cuts set to strike the Pentagon and many domestic programs.
Those cuts — postponed by the recent “fiscal cliff” deal — are the punishment for the failure of a 2011 deficit supercommittee to reach an agreement. The panel was itself established by the hard-fought 2011 increase in the debt limit.
Democrats went along because the debt increase wasn't contingent on matching cuts to the budget, as long demanded by House Speaker John Boehner (R., Ohio).
Senate Republicans offered several amendments, but all failed on party-line votes. Any amendments to the bill would have required the House to vote again.