The U.S. House of Representatives on Wednesday narrowly approved a bill to raise the government's $31.4 trillion debt ceiling that includes sweeping spending cuts over the next decade.

The bill is not expected to bypass the Senate, and even if it passes there, President Joe Biden would veto it.

But the bill's support, mostly from the Republican Party with 217 in favor and 215 against, represents a win for Republican House Speaker Kevin McCarthy in an issue that has rattled investors and markets.

McCarthy now hopes to co-opt Biden to negotiate spending cuts, even as the White House and congressional Democrats insist on raising the debt limit without conditions.

The Treasury Department could find itself unable to pay its bills within weeks if Congress does not take action.

U.S. debt stands at nearly $32 trillion, a figure that has accumulated under presidents from both major parties for decades.

U.S. Treasury debt is the basis for valuing the world's safe-haven assets, and its interest rates are the basis for pricing financial products and transactions around the world.

A confrontation in 2011 led to a downgrade of the government's credit rating, and consequently to higher borrowing costs and a blow to investments.


Spending cuts

McCarthy called on the US president to start negotiations on increasing the debt limit and cutting spending, and urged the Senate to either approve the House bill or pass its own bill.

McCarthy celebrated the victory and conducted frantic negotiations to replace the votes of some Republican lawmakers who rejected his bill, saying the bill would get America "back on track."

"Our chamber met to pass the only plan in Washington that would address the debt ceiling and stop excessive and inflated federal spending."

The House bill would increase Washington's borrowing power by $1.5 trillion or extend it until March 31, whichever comes first, raising the prospect of another round of negotiations during the 2024 presidential campaign.

The bill also cuts spending to 2022 levels and then caps growth at 1% per year, eliminates some tax incentives related to renewable energy, and tightens requirements for some anti-poverty programs.


White House Warnings

White House press secretary Karen Jean-Pierre said Biden would not sign such cuts.

"President Biden will not force the middle class and working families to bear the burden of tax cuts for the wealthy, as the bill does," she said in a statement.

"The president has made it clear that this bill has no chance of becoming law."

Chuck Schumer, the leader of Senate Democrats, told reporters that the House bill was "dead as it arrived" in the Senate, and that the action by Republicans "only dangerously brings us closer" to a historic debt default that would shake markets and economies around the world.

Democrats, who control the Senate by 51 votes, also lamented the drastic spending cuts the measure could bring to programs such as Medicare for the Poor and other programs including law enforcement and airport security operations.