The US Senate has passed bipartisan legislation backed by President Joe Biden that lifts the government's $US31.4 ($A47.7) trillion debt ceiling, averting what would have been a first-ever default.
The Senate voted 63-36 to approve the bill that was passed on Wednesday by the House of Representatives, as lawmakers raced against the clock following months of partisan bickering between Democrats and Republicans.
The Treasury Department had warned it would be unable to pay all its bills on June 5 if Congress failed to act by then.
"We are avoiding default tonight," Senate majority leader Chuck Schumer said on Thursday as he steered the legislation through his 100-member chamber.
Biden praised Congress's timely action. "This bipartisan agreement is a big win for our economy and the American people," the president said in a statement, adding that he will sign it into law as soon as possible. He said he would make an additional statement on Friday.
Before the final vote, senators tore through nearly a dozen amendments - rejecting all of them during a late-night session in anticipation of Monday's deadline.
With this legislation, the statutory limit on federal borrowing will be suspended until January 1, 2025. Unlike most other developed countries, the United States limits the amount of debt the government can borrow, regardless of any spending allocated by the legislature.
Schumer and his Republican counterpart minority leader Mitch McConnell delivered on their promise to do all they could to speed along the bill negotiated by Biden and House Speaker Kevin McCarthy.
"America can breathe a sigh of relief," Schumer said in remarks to the Senate.
Republicans had blocked passage of any debt limit increase until they locked in some wide-ranging spending cuts in a move they said would begin addressing a rapidly escalating national debt.
Biden instead pushed for tax increases on the wealthy and corporations to help address the growing debt. Republicans refused to consider any sort of tax hikes.
Treasury technically hit its limit on borrowing in January. Since then it has been using "extraordinary measures" to patch together the money needed to pay the government's bills.
Biden, Treasury Secretary Janet Yellen and congressional leaders all acknowledged that triggering a debt default for lack of funds would have serious ramifications.
Those included sending shock waves through global financial markets, possibly triggering job losses and a recession in the United States and raising families' interest rates on everything from home mortgages to credit card debt.
Schumer drove that point home even as he steered the bill toward final passage.
A default, he said, "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."
The Republican-controlled House passed the bill on Wednesday evening in a 314-117 vote. Most of those who voted against the bill were Republicans.
"Time is a luxury the Senate does not have," Schumer said on Thursday. "Any needless delay or any last-minute holdups would be an unnecessary and even dangerous risk."
