US Senate approves deal on debt increase

The US Senate has voted to pass plans for a temporary debt increase.
The US Senate has voted to pass plans for a temporary debt increase.

The US Senate has approved legislation to temporarily raise the federal government's $US28.4 trillion ($A38.8 trillion) debt limit and avoid the risk of a historic default later this month.

It put off until early December a decision on a longer-lasting remedy, with the Senate voting 50-48 to pass the bill following weeks of partisan fighting.

The Senate-passed bill now goes to the House of Representatives, which needs to approve it before President Joe Biden can sign it into law.

The House will hold a vote on the bill on Tuesday, according to the office of the No.2 House Democrat, Steny Hoyer.

"President Biden looks forward to signing this bill as soon as it passes the House and reaches his desk," White House press secretary Jen Psaki said in a statement on Thursday.

"As we approach the coming months, we hope that even more Republicans will join Democrats in responsibly addressing the debt limit instead of choosing default or obstruction."

The $US480 billion ($A657 billion) increase to the current debt limit is expected to be exhausted by December 3, the same day funding for most federal programs also expires under a stop-gap measure passed earlier this month following another standoff.

That means over the next eight weeks the bitterly divided Congress will have the twin challenges of finding some middle ground on agency spending through to September 2022 - ranging from education and foreign aid programs to immigration enforcement and airport security - as well as avoiding yet another debt-limit meltdown.

The vote followed a months-long standoff bringing the nation close to the October 18 date from when the Treasury Department forecast it would no longer be able to meet its financial obligations.

"Republicans played a dangerous and risky partisan game and I am glad that their brinksmanship did not work," Senate Majority Leader Chuck Schumer said after the vote.

The plan emerged on Wednesday after top Senate Republican Mitch McConnell said Republicans were open to a temporary hike after twice blocking Democrats' attempts to raise the cap.

That offer came after Biden raised the possibility of bypassing the Senate's filibuster rule requiring 60 of the 100 members to agree on most legislation.

Democrats had been trying to pass legislation that would have raised the debt limit through to the end of 2022, which Republicans blocked.

While the deal relieves debt ceiling pressures for now, it adds to the high-stakes, partisan battles Congress will wage until the end of the year.

Democrats want to pass two massive spending bills that make up much of Biden's domestic agenda in the coming weeks, including a multi-trillion-dollar social policy package to be passed by reconciliation and a $US1 trillion bipartisan infrastructure bill.

But by late November, their attention will have to return to funding the government and again avoiding the debt ceiling.

Australian Associated Press