US Senate backs debt crisis deal, House to vote next

US Senate backs debt crisis deal, House to vote next

WASHINGTON -The US Senate overwhelmingly approved a deal on Wednesday to end a political crisis that partially shut down the federal government and brought the world's biggest economy to the edge of a debt default that could have threatened financial calamity.

The House of Representatives quickly convened and was expected to follow suit after Republicans dropped their bid to link the spending measure to changes in President Barack Obama's healthcare law. Obama vowed to sign the bill as soon as it arrives on his desk and to begin reopening the government "immediately."

The deal, however, offers only a temporary fix and does not resolve the fundamental issues of spending and deficits that divide Republicans and Democrats. It funds the government until January 15 and raises the debt ceiling until February 7, so Americans face the possibility of another government shutdown early next year.

With the deadlock broken just a day before the US Treasury said it would exhaust its ability to borrow new funds, US stocks surged, nearing an all-time high.

Taking the podium in the White House briefing room after the Senate vote, Obama said that with final congressional passage, "We can begin to lift this cloud of uncertainty and unease from our businesses and from the American people."

"Hopefully next time it won't be in the 11th hour," Obama said. "We've got to get out of the habit of governing by crisis."

The stand-off between Republicans and the White House over funding the government forced the temporary lay-off of hundreds of thousands of federal workers from October 1 and created concern that crisis-driven politics was the "new normal" in Washington.

Senator John McCain, whose fellow Republicans triggered the crisis with demands that President Barack Obama's signature "Obamacare" healthcare law be defunded, said on Wednesday the deal marked the "end of an agonizing odyssey" for Americans.

"It is one of the most shameful chapters I have seen in the years I've spent in the Senate," said McCain, who had repeatedly warned Republicans not to link their demands for Obamacare changes to the debt limit or government spending bill.

The Senate passed the measure on a 81-18 vote, and the House was expected to approve it as well, clearing the way for Obama to sign it into law no later than Thursday, when the Treasury says it will hit the US$16.7 trillion (S$21 trillion) debt ceiling.

Fully reopening the government was expected to take several days. While essential functions like defence and air traffic control have continued, national parks and agencies like the Environmental Protection Agency have been largely closed.

Although the deal would only extend US borrowing authority until February 7, the Treasury Department would have tools to temporarily extend its borrowing capacity beyond that date if Congress failed to act early next year.

The agreement includes some income verification procedures for those seeking subsidies under the healthcare law, but Republicans surrendered on their attempts to include other changes, including the elimination of a medical device tax.

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