US averts first-ever default as Congress passes debt deal

Fending off a US default, the Senate has given final approval to a ceiling and budget cuts package, grinding into the night to wrap up work on the bipartisan deal and send it to President Joe Biden's desk to become law before the fast-approaching deadline.

The upper chamber of Congress late on Thursday rubber-stamped a bill passed a day earlier by the House of Representatives to extend the country's borrowing authority through 2024 — staving off the next showdown until after the presidential election.

The compromise package negotiated between Biden and House Speaker Kevin McCarthy leaves neither Republicans nor Democrats fully pleased with the outcome.

But the result, after weeks of hard-fought budget negotiations, shelves the volatile debt ceiling issue that risked the US and global economy until 2025 after the next presidential election.

Approval in the Senate on a bipartisan vote, 63-36, reflected the overwhelming House tally the day before, relying on centrists in both parties to pull the Biden-McCarthy package to passage.

Biden said the deal is a "big win" for the American economy.

"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," he tweeted, adding that he would sign the bill "as soon as possible" and address the nation on Friday.

Senate Majority Leader Chuck Schumer said the bill's passage means "America can breathe a sigh of relief."

Tough fight

After the House overwhelmingly approved the package late on Wednesday, Senate Republican leader Mitch McConnell signalled he too, wanted to waste no time ensuring it became law.

Touting its budget cuts, McConnell said on Thursday, "The Senate has a chance to make that important progress a reality."

For weeks negotiators laboured late into the night to strike a deal with the White House, and for days McCarthy had worked to build support among skeptics.

Tensions had run high in the House the night before as hard-right Republicans refused the deal. Ominously, the conservatives warned of possibly trying to oust McCarthy over the issue.

But Biden and McCarthy assembled a bipartisan coalition, with Democrats ensuring passage on a robust 314-117 vote.

All told, 71 House Republicans broke with McCarthy to reject the deal.

"We did pretty dang good," McCarthy said afterwards.

As for discontent from Republicans who said the spending restrictions did not go far enough, McCarthy said it was only a "first step."

Democrats also had complaints, decrying the new work requirements for older Americans, those 50-54, in the food aid programme, the changes to the landmark National Environmental Policy Act and approval of the controversial Mountain Valley Pipeline natural gas project they argue is unhelpful in fighting the climate crisis.