Senate labors to stave off US default, wrap up Biden-McCarthy debt ceiling deal

By LISA MASCARO, KEVIN FREKING, STEPHEN GROVES and FARNOUSH AMIRI (Associated Press)

WASHINGTON (AP) — Straining to prevent U.S. default, the Senate labored into Thursday evening trying to wrap up work on a debt ceiling and budget cuts package that overwhelmingly cleared the House. The urgent aim was to send it to President Joe Biden’s desk to become law before the fast-approaching deadline.

Senate Majority Leader Chuck Schumer said the chamber was digging into the bill that Biden negotiated with Speaker Kevin McCarthy and would “keep working until the job is done.”

He warned of a crush of ideas from senators anxious to revise the bill’s budget cuts and environmental policy changes, but said, “There is no good reason, none, to bring this process down to the wire.”

Passage in the Senate will require cooperation between Democrats and Republicans, much the way the narrowly divided House was able to approve the compromise late Wednesday night. Fast action is vital if Washington is to meet next Monday’s deadline when Treasury has said the U.S. will start running short of cash to pay its bills, risking a devastating default.

Having remained largely on the sidelines during much of the Biden-McCarthy negotiations, several senators are insisting on debate over their ideas to reshape the package. But making any changes at this stage seemed unlikely, and even opponents of the final deal say they will not hold it up. They hoped to launch into votes Thursday night, but none were scheduled.

Like Schumer, Senate Republican leader Mitch McConnell signaled he wanted to waste no time.

Touting the House package with its budget cuts, McConnell said Thursday, “The Senate has a chance to make that important progress a reality.”

The hard-fought compromise pleased few in its entirety, but lawmakers assessed it was better than the alternative — economic upheaval at home and abroad if Congress failed to act. Tensions had run high in the House as hard-right Republicans refused the deal, but Biden and McCarthy assembled a bipartisan coalition, with Democrats ensuring passage on a robust 314-117 vote.

“We did pretty dang good,” McCarthy, R-Calif., said afterward.

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

Biden, watching the tally from Colorado Springs where he delivered the commencement address Thursday at the U.S. Air Force Academy, phoned McCarthy and the other congressional leaders after the vote. In a statement, he called the outcome “good news for the American people and the American economy.”

The White House immediately turned its attention to the Senate, its top staff phoning individual senators.

One emerging hang-up came from Republican senators complaining that military spending, though boosted in the deal, was not increased enough — particularly as they eye supplemental spending that will be needed this summer to support Ukraine in the war against Russia.

“We need safety and security,” said Sen. Lindsey Graham, R-S.C. “To my House colleagues, I can’t believe you did this.”

Overall, the 99-page bill restricts spending for the next two years, suspends the debt ceiling into January 2025 and changes some policies, including imposing new work requirements for older Americans receiving food aid and greenlighting an Appalachian natural gas line that many Democrats oppose.

It bolsters funds for defense and veterans, cuts back new money for Internal Revenue Service agents and rejects Biden’s call to roll back Trump-era tax breaks on corporations and the wealthy to help cover the nation’s deficits.

Raising the nation’s debt limit, now $31.4 trillion, would ensure Treasury could borrow to pay already incurred U.S. debts.

Conservative Republican senators proposed amendments including to further cut spending, while a Democrat sought to remove the gas pipeline approval among others — none expected to be approved.

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

The speaker faced a tough crowd, as conservatives from the hard-right House Freedom Caucus, cheered on by outside groups, lambasted the compromise as falling well short of the needed spending cuts. Ominously, the conservatives warned of possibly trying to oust McCarthy over the issue.

One influential Republican, former President Donald Trump, held his fire: “It is what it is,” he said of the deal in an interview with Iowa radio host Simon Conway.

Democrats also had complaints, decrying the new work requirements for older Americans, those 50-54, in the food aid program, 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 climate change.

The energy pipeline is important to Sen. Joe Manchin, D-W.Va., and he defended the development running through his state, saying the country cannot run without the power of gas, coal, wind and all available energy sources.

But, offering an amendment to strip the pipeline from the package, Democratic Sen. Tim Kaine of Virginia said it would not be fair for Congress to step into a controversial project that he said would also course through his state and scoop up lands in Appalachia that have been in families for generations.

Facing Republican resistance overall to even allowing more borrowing to cover the nation’s debts, Democrats powered the House bill to passage late Wednesday, All told, 71 House Republicans broke with McCarthy rejecting the deal.

As the House tally faltered on an initial procedural vote, Democratic Leader Hakeem Jeffries stood silently and raised his green voting card, signaling that the Democrats would fill in the gap to ensure passage. In the 435-member chamber, where 218 votes were needed for approval..

“Once again, House Democrats to the rescue to avoid a dangerous default,” said Jeffries, D-N.Y. “What does that say about this extreme MAGA Republican majority?” he said about the party aligned with Trump’s ”Make America Great Again” political stance.

The nonpartisan Congressional Budget Office said the spending restrictions in the package would reduce deficits by $1.5 trillion over the decade, a top goal for the Republicans trying to curb the debt load.

In a surprise that complicated Republicans’ support, however, the CBO said their drive to impose work requirements on older Americans receiving food stamps would end up boosting spending by $2.1 billion over the time period. That’s because the final deal exempts veterans and homeless people, expanding the food stamp rolls by 78,000 people monthly, the CBO said.

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AP White House Correspondent Zeke Miller, AP writers Mary Clare Jalonick, Seung Min Kim and Jill Colvin and video journalist Nathan Ellgren contributed to this report.

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