Debt ceiling news – live: Biden signs debt limit bill after hailing deal in Oval Office address

Three of the proposed amendments to the Fiscal Responsibility Act only require a simple majority. They are proposed by senators Lee, Kaine, and Kennedy. The remaining eight require a majority of 60 votes, as does the final passage of the bill.

Chuck Schumer has locked in a time agreement on the 11 amendment votes and final passage vote with only 10 minutes allotted to each amendment after the first one.

Voting will commence at 7.30pm.

None of the amendments are expected to pass.

Mr Schumer has asked senators to stay in or near the chamber.

A bill that would raise the debt ceiling would need to get a majority of votes in both the US Senate and the House of Representatives.

The Senate is controlled by Democrats so any increase that Joe Biden wants to get will more likely pass there. But Republican-controlled House is a bigger hurdle.

Republican House Speaker Kevin McCarthy is also very weak. It took 15 attempts for him to manage to convince enough Republicans to vote for him to become the speaker.

He therefore cannot afford to lose the support of more than a few of his colleagues, including some on the extreme fringe of the party.

Here’s what Senator Chuck Schumer told the Senate this evening:

I am pleased, so pleased, to announce that both sides have just locked in an agreement that enables the Senate to pass legislation tonight, avoiding default.

This is what will happen on the floor, in a few minutes, the Senate will begin holding votes on 11 amendments, 10 from the Republican side, one from the Democratic side. To finish our work tonight, after the first amendment, we are limiting each vote to ten minutes. So i ask my colleagues to stay in their seats or near the floor during the votes. Let's keep this process moving quickly. After we finish voting on the amendments, we are immediately considering final passage and by passing this bill we will avoid default tonight.

America can breathe a sigh of relief, because with this process we are avoiding default. From the start, avoiding default has been our north star. The consequences of default would be catastrophic. It would almost certainly cause another recession. It would be a nightmare for our economy and millions of american families. It would take years, years to recover from. But for all the ups and downs and twists and turns it took to get here, it is so good for this country that both parties have come together at last to avoid default.

I thank my colleagues, both sides of the aisle, for their cooperation. Let's finish the job and send this very important bipartisan bill to the president's desk tonight.

It was advice that Mitch McConnell had offered to Joe Biden once already: To resolve the debt-limit standoff, he needed to strike a deal with House Speaker Kevin McCarthy — and McCarthy alone. But after a first meeting of the top four congressional leaders with the president in early May, the Senate minority leader felt the need to reemphasize his counsel.

After returning from the White House that day, McConnell called the president to privately urge him to “shrink the room” – meaning no direct involvement in the talks for himself, Senate Majority Leader Chuck Schumer and House Minority Leader Hakeem Jeffries.

That, McConnell stressed to Biden, was the only way to avert a potentially economy-rattling default.

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Throughout the deliberations, Republicans insisted on putting in place work requirements for the Supplemental Nutrition Assistance Program, also known as SNAP and formerly called food stamps. While ultimately the agreement did not include work requirements for Medicaid, it raised the age for work requirements for able-bodied adults without children between the ages of 50 and 54.

The legislation also reduces the number of exemptions that states can use for people who would otherwise be subject to work requirements and prevents them from carrying over exemptions for more than one year.

Senator Chuck Schumer reads a joint statement with Senator Mitch McConnell on defence appropriations

“This debt ceiling deal does nothing to limit the Senate’s ability to appropriate emergency supplemental funds to ensure our military capabilities are sufficient…”

He says they can still address funding to counter threats from Iran, China, and Russia, including its ongoing war on Ukraine.

Mr Schumer adds: “I want to remind members, we were indulgent in the first vote, that’s over. We’re doing 10 minute votes. Please stay in your seats so we can finish this bill in a reasonable hour.”

The first amendment vote was defeated by a wide margin.

Ultimately much more than can be summarised here.

It also would depend on how long the situation goes on for. In early May, Alec Phillips, chief US political economist at Goldman Sachs Research, warned that a delay of any more than a few days would see massive amounts of money being pulled from the US economy and could easily tip the US into a recession.

Even coming close to the deadline could create problems. In the 2011 debt ceiling battle, rating agency Standard & Poor’s downgraded the US’s credit rating even though a deal was reached a day before the deadline.

“On the economic side it’s not complicated. It would just be bad,” Mr Phillips said.

He said that a brief delay would, from a direct economic perspective, be worth around 10 billion dollars a day.

The Congressional Budget Office and the US Treasury Department estimate that any brinkmanship could cost 200,000 jobs in the third quarter of the year, a short default would put half a million out of work while a protracted default would see 8.3 million jobs lost and 6.1% shaved off GDP.

The economic impacts will also be felt globally, as so much of the world economy is based on the US financial system.

While the legislation imposes new work requirements for able-bodied adults, it also exempts people who are experiencing homelessness, veterans and people between the ages of 18 and 24 who aged out of the foster care system from such requirements. The Congressional Budget Office estimated that when the work requirements and new exclusions are in effect, “approximately 78,000 people would gain benefits in an average month” between the 2025 to 2030 period.