Senate passes bill to skirt default, reopen government

The Senate voted 81-18 to pass a last-minute bipartisan bill Wednesday to fend off a looming U.S. default and to reopen the federal government. The bill will now move onto the House, where representatives will conduct another vote. If they too vote to pass the bill, President Barack Obama will sign it into law and the country will have, at least temporarily, averted a financial crisis some analysts warned could trigger another recession.

“Once this agreement arrives on my desk, I will sign it immediately," Obama said at a press conference following the Senate vote. He added that the federal government would reopen "immediately."

Congress reconvened Wednesday with just hours to go until a deadline to raise the debt ceiling or see America potentially miss its payment obligations for the first time in history. 

Shortly after midday, Senate Democrat Majority leader Harry Reid announced an agreement that would avert the default and reopen government — subject to a shutdown that began on Oct. 1.

"The compromise we reached will provide our economy with the stability it desperately needs," Reid said.  

Reid announced on the Senate floor Wednesday that the deal would fund the government through Jan. 15 and averts default through Feb. 7. Reid said that time would allow Congress to work toward a long-term agreement that would prevent such frequent crises.

"After weeks spent facing off across a partisan divide that often seemed too wide to cross, our country came to the brink of a disaster, but in the end, political adversaries set aside their differences and disagreements to prevent that disaster. I thank the Republican leader for his diligent efforts to reach this important agreement," Reid said, speaking of Sen. Mitch McConnell. 

Republican Senator Ted Cruz, who had been eyed as a potential barrier to the bill's smooth progress, said he did not intend to delay its passage. That was a key concession that signaled a strong possibility that both houses could act by day's end. 

A Senate breakthrough has been in the air since Reid and McConnell resumed talks Tuesday night. Aides for both voiced optimism about striking an agreement Wednesday that could pass both houses of Congress and reach President Barack Obama's desk before Thursday, when the U.S. Treasury says it will begin running out of cash.

The Dow Jones industrial average surged 200 points Wednesday morning on news that Washington was closing in on a deal.

News of the Senate deal follows days of wrangling in Congress over the debt ceiling deadline. It also comes on day 16 of a government shutdown that has seen hundreds of thousands of federal employees furloughed. 

"People are so tired of this," Obama said Tuesday in an interview with Los Angeles TV station KMEX, ion an apparent reference to the cycle of brinkmanship in Washington.

The shutdown began on Oct. 1 after House Republicans refused to accept a temporary funding measure to provide the money to run the government unless Obama agreed to defund or delay his health care overhaul law. It was the first government shutdown in 17 years, furloughing hundreds of thousands of federal workers.

House Republicans also refused to move on the needed approval for raising the amount of money the Treasury can borrow to pay U.S. bills.

The tea party faction of House Republicans, urged on by conservative Texas Republican Ted Cruz in the Senate, has seen both deadlines as leverage to gut the health care overhaul. The White House refused to abandon Obama's signature legislative achievement, and the Democratic-controlled Senate rejected legislation to achieve the Republicans' goal.

House Republicans have since dropped their demands to defund or delay the health care law known as Obamacare. But Congress still struggled to pass two measures that are normally routine: an emergency funding bill to keep the government running and legislation to raise the $16.7-trillion borrowing limit.

According to Treasury Secretary Jacob Lew, unless Congress acts by Thursday, the government will lose its ability to borrow and will be required to meet its obligations relying only on cash on hand and incoming tax receipts.

Billionaire investor Warren Buffett, chairman and chief executive of Berkshire Hathaway, said Wednesday that the threat of not raising the U.S. debt ceiling is being used as a political weapon.

The idea that Congress could fail to raise the $16.7 trillion U.S. borrowing limit is a "political weapon of mass destruction," Buffett told the cable television network CNBC.

The deal that came out of the Senate talks mirrored a deal the leaders had nearly reached on Monday. That agreement was described as extending the debt limit through Feb. 7, immediately reopening the government fully and keeping agencies running until Jan. 15 — possibly leaving lawmakers clashing over the same disputes early in the new year.

It also set a mid-December deadline for bipartisan budget negotiators to report on efforts to reach compromise on longer-term issues like spending cuts. And it likely would require the Obama administration to certify it can verify the income of people who qualify for federal subsidies for medical insurance under the 2010 health care law.

Al Jazeera and wire services