US Congress passes deal to avert feared debt default

The US Congress has passed a Senate-negotiated bill to end the government shutdown and raise the country's borrowing limit, averting a potentially catastrophic default on its debts.

President Obama signed the bill into law in the early hours of this morning, officially reopening the government after the first federal shutdown in 17 years.

The passage of the bill in the Senate and House of Representatives ended political stalemate in Washington that closed the government for 16 days and put more than 700,000 workers on unpaid leave. The deal was struck on the eve of the US Treasury being unable to borrow to pay its bills.

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Members of the House of Representatives leave the US Capitol last night. The US Congress voted to halt the 16-day government shutdown and raise the US debt limit, ending the nation’s fiscal impasse. Photograph: Pete Marovich/Bloomberg

The government was due to hit the $16.7 trillion (€12 trillion) debt ceiling today and without an increase in the limit the Treasury would have been relying on dwindling cash reserves and tax revenue.

As that clock ticked down, the Republican-led House voted 285 to 144 for the bill after the Democrat-led Senate overwhelmingly passed the cross-party deal, finalised earlier yesterday, by 81 votes to 18.

The bill was supported by 87 votes from House Republicans who triggered the shutdown by originally refusing to fund government unless President Obama’s healthcare law was delayed or repealed.

The party conceded defeat earlier yesterday in the fight over the law that extends health insurance to those who either cannot afford or receive cover. Republican House Speaker John Boehner waived a party rule blocking any bills being put to a vote on the floor without majority Republican support.

Speaking after the Senate vote, Mr Obama praised Congress for bringing the political stalemate to a close and urged lawmakers not to repeat the crisis.

“Hopefully, next time, it won’t be in the 11th hour,” he said. “One of the things I have said throughout this process is we’ve got to get out of the habit of governing by crisis.”

Mr Obama called on his political opponents to “put the past three weeks behind us” and move forward to agree a budget, changes to US immigration laws and a farm bill before the end of the year.

The fiscal deal creates only a truce between Democrats and Republicans over federal spending as the bill only funds the government until January 15th and increases the debt limit until February 7th.

Democrats and Republicans must sit down to agree a long-term budget blueprint by December 13th under the agreement. Mr Obama said throughout the political impasse that he was willing to negotiate with Republicans on a wide-ranging budget once they reopened government and raised the debt limit.

Polls showed Americans mostly blame Republicans for the political deadlock in a high-stakes strategy followed by the party’s leadership, driven by conservative hardliners from the Tea Party faction.

Republican senator John McCain, who urged his party not to use the shutdown or the debt ceiling to unwind Obamacare, said that deal marked the “end of an agonising odyssey” for Americans.

“It is one of the most shameful chapters I have seen in the years I’ve spent in the Senate,” he said.

In a surprise move, Paul Ryan, a Republican congressman and last year's losing vice-presidential candidate, broke with party leadership and voted against the bill. Mr Ryan had previously appeared willing to play a more moderate role, suggesting a potential compromise with Democrats last week.

“Today’s legislation won’t help us reduce our fast-growing debt,” he said after the vote. “In my judgment, this isn’t a breakthrough. We’re just kicking the can down the road.”

Peter King, a Republican congressman, told CNN that Mr Ryan would be a chief negotiator in budget talks with Democrats and "probably wanted to maintain credibility" among the party's far-right.