U.S. lawmakers avoided a government shutdown Friday after the House backed a Senate-approved plan that funds the government for a further two years with a $300 billion spending boost that would swell the federal deficit.
The U.S. House of Representatives voted 240 to 186 to approve the plan which suspends the debt ceiling for one year, but creates by some measures the biggest deficit in a full-employment economy since the Second World War. The nonpartisan Committee for a Responsible Federal Budget has said the bill, along with last year's Republican-led tax reform, will add $1.4 trillion to the federal deficit over the next 10 years.
The House vote, which funds the government until March 23, overcame concern from some Congressional lawmakers, not to mention global investors, have been worried that President Donald Trump's broader economic plans are adding too much fiscal support to a near-overheated economy. Trump is expected to sign the bill later today.
Benchmark 10-year U.S. Treasury yields, the trigger for the start to global stock market sell-off which started last Friday, have been edging higher as investors count the cost of the President's deficit-increasing strategy and were marked at a near four-year high of 2.85%.
However, a more immediate concern for lawmakers is likely to be the reaction Friday on Wall Street if the deal didn't pass, given that the Dow Jones Industrial Average plunged more than 1,000 points last night, taking it -- and the more representative S&P 500 -- into so-called correction territory, a condition where stocks retreat 10% from a recent peak (in this case, the peak was only reached on Jan. 26).
That said, Friday's vote was far from certain, with House Democratic leader Nancy Pelosi urging her colleagues to oppose it on the grounds that it needs to include steps to prevent the deportation of the 700,000 so-called Dreamers, or children of illegal immigrants who were born in the United States.