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| The US Senate passed a bill to raise the debt ceiling. (Source: Getty Images) |
The debt ceiling bill will now go to President Joe Biden for his signature as the US Treasury Department's June 5 deadline for the parties to reach an agreement to raise the $31.4 trillion debt ceiling before the federal budget runs out.
This is a crucial next step towards passing a final bill, before a potential default could have devastating effects on the world's largest economy.
Speaking on the Senate floor, Senate Democratic Leader Chuck Schumer said: “America can breathe a sigh of relief because we are avoiding default.”
The 99-page bill would cap spending for the next two years, suspend the debt ceiling until January 2025 and make policy changes, including new work requirements for older Americans receiving food aid and greenlighting the Appalachian natural gas pipeline.
Republicans argue that deep spending cuts are needed to rein in the nation's $31.4 trillion debt, which is equivalent to the economy's annual output.
Most of the savings would come from limiting spending on domestic programs such as housing, education, scientific research and other forms of spending. Military spending would be allowed to increase over the next two years.
Previously, on May 31, the Republican-controlled House of Representatives voted 314-117 to pass a bill to raise the debt ceiling.
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