
WASHINGTON—Congress passed must-do legislation Thursday to permit the government to borrow hundreds of billions of dollars more to meet its obligations, averting a first-ever government default that had loomed as early as mid-February.

The 64-34 vote in the Democratic-controlled Senate sent the measure to President Barack Obama, who has said he will sign it. The Republican-led House passed the legislation last week.



Without the bill, the Treasury Department says, the government would default on its obligations by as early as mid-February.

"Failure to pass this bill will set off an unpredictable financial panic that would plunge not only the United States, but much of the world, back into recession," said Sen. Max Baucus, D-Mont. "Every single American would feel the economic impact."


Those cuts—postponed by the recent "fiscal cliff" deal—are the punishment for the failure of a 2011 deficit supercommittee to reach an agreement. The panel was itself established by the hard-fought 2011 increase in the debt limit.

The Senate vote broke exactly opposite of the House tally last week. Just 12 Republican senators voted for the measure, which swept through the House with widespread GOP support. Only one Democrat, Sen. Joe Manchin of West Virginia, opposed the bill. In the House, most Democrats and top leaders like Minority Leader Nancy Pelosi, D-Calif., opposed the legislation.

Democrats went along because the debt increase wasn't contingent on matching cuts to the budget, as long demanded by House Speaker John Boehner, R-Ohio.

Senate Republicans offered several amendments, but all failed on party-line votes. Any amendments to the bill would have required the House to vote again.

Sen. Pat Toomey, R-Pa., proposed an amendment to ensure that in the case of a cash crunch the government would use available tax revenue to make sure that bondholders, Social Security recipients and the military get paid. Sen. Rob Portman, R-Ohio, sought to require that any immediate increase in the debt limit be paired with commensurate cuts to spending, which could be spread out over 10 years.

To sell the measure to House GOP conservatives last week, Boehner attached a "no budget, no pay" provision that would withhold pay for House and Senate members if the chamber in which they serve fails to pass a budget plan. That was a slap at the Democratic-controlled Senate, which hasn't passed a budget blueprint since 2009.

The "no budget, no pay" provision was seen by congressional insiders as a bad idea whose time had arrived. For starters, it made members of the minority party dependent on the ability of the majority party to advance a budget if they all were to be paid. But the announcement of the move was quickly followed by an announcement by Senate Democrats that they would indeed advance a budget for the first time in four years.

Lawmakers have already shifted their focus to the across-the-board cuts, which would pare $85 billion from this year's budget after being delayed from Jan. 1 until March 1 and reduced by $24 billion by the recently enacted tax bill. Defense hawks are particularly upset, saying the Pentagon cuts would devastate military readiness and cause havoc in defense contracting. The cuts, called a "sequester" in Washington-speak, were never intended to take effect but were instead aimed at driving the two sides to a large budget bargain.
