Senate approves two-year budget deal that prevents default on debt

WASHINGTON — The Senate passed a two-year budget deal early Friday that would prevent the U.S. government from defaulting on its debts next week and help avert a potential government shutdown in December.

Senators voted 64-35 to approve the legislation shortly after 3 a.m.

The House approved the budget agreement Wednesday despite opposition from a majority of Republicans. President Obama was poised to sign it into law.

The legislation would raise the debt limit through March 2017, allowing the government to continue to borrow money to pay its bills. The Treasury Department has warned that the government will default on its debts unless the limit is raised by Tuesday.

The deal also lifts budget caps to boost spending for military and domestic programs by a total of $80 billion over two years. That reduces the possibility of a government shutdown in December, when current funding for federal agencies expires. Additionally, it would protect senior citizens from an expected spike in Medicare premiums next year.

The increased spending — divided equally between military and domestic programs — would be offset in part by changes in the Social Security system designed to achieve $168 billion in long-term savings.

Divided House passes two-year budget deal to avoid fiscal breach, raise spending

"It's not perfect...no legislation is," said Senate Minority Leader Harry Reid, D-Nev. "But this budget agreement accomplishes two major priorities that Democrats have long supported: It promotes economic growth by providing relief from ... damaging cuts for two years. And it ensures that we invest equally in the middle class and the Pentagon."

Senate Majority Leader Mitch McConnell, R-Ky., had a harder time convincing Republican senators to support the bill. Many conservatives objected to lifting the budget caps and raising the debt limit.

"I share some concerns other colleagues have raised," McConnell said. "But here's the bottom line: This is a fully-offset agreement that rejects tax hikes, secures long-term savings through entitlement reforms, and provides increased support for our military."

Sen. Jerry Moran, R-Kan., opposed the deal.

"Each time Congress lifts the debt ceiling without genuine and substantial reductions in spending, it undermines our nation's long-term economic health and reduces the ability of our children and grandchildren to pursue the American Dream," Moran said.

By pushing the deal quickly through the House, outgoing Speaker John Boehner, R-Ohio, eased pressure on his successor, Rep. Paul Ryan, R-Wis. Ryan, who was sworn in as the new speaker on Thursday, will not have to begin his tenure by facing an imminent fiscal crisis.