The Fiscal Responsibility Act, or the bill to raise debt limit and cap government spending in the US was passed by a wide margin on late on Wednesday Eastern Time in the House. 314 votes were cast in favour of the bill, while 117 were cast against. The bill will now move to the senate for a vote, just days before Monday's default deadline.

Both Democrats and Republicans voted in support of the bill after days of tense negotiations between both parties who were mainly at loggerheads over curbing government spending among other issues.

Treasury Secretary Janet Yellen has said federal funds could dry up in the coming days unless lawmakers raise the borrowing limit before next week.

Failure to do so would upset global financial markets, spark job losses in the U.S. and jeopardize vital government benefits for millions of Americans, triggering a potential "catastrophe," according to Yellen.

The Fiscal Responsibility Act is the result of a deal reached between McCarthy and President Joe Biden, which essentially hands conservatives several ideological policy victories in exchange for their votes to raise the debt ceiling beyond next year’s presidential election and into 2025.

"Tonight, the House took a critical step forward to prevent a first-ever default and protect our country’s hard-earned and historic economic recovery," US President Joe Biden tweeted after the move.

"I urge the Senate to pass it as quickly as possible so that I can sign it into law, and our country can continue building the strongest economy in the world," the tweet further said.

(With Inputs From Agencies.)

First Published:Jun 1, 2023 7:06 AM IST