The US House of Representatives passed Wednesday a measure to postpone the so-called debt ceiling deal by three months.
By a vote of 285-144, the Republican controlled body headed off an inevitable battle over maintaining the country's ability to borrow.
The three-month suspension of the $16.4 trillion ceiling gives Washington breathing room to negotiate a deal on spending cuts and tax raises to reduce the country's deficit and debt.
Leaders in the Democratic-controlled Senate and the White House have pledged to support the plan, reported the Washington Post.
Without the suspension the debt limit would have left the country unable to pay its bills - an unsettling prospect for the world economy.
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Opposition to raising the limit came from 33 right-wing members of the House and 111 Democrats who said that kicking the can down the road was dangerous given the fragility of the economy.
“We know with certainty that a debt crisis is coming to America,” said former vice presidential nominee Rep. Paul Ryan (R-Wis.).
“We have a moral obligation to fix that.”
The US Senate could take up the measure as early as next week.
The Los Angeles Times reported that after Obama had won modest tax hikes on wealthy Americans, Republicans are now saying that any new fiscal deal needs massive spending cuts on entitlement programs.
CNN also points out that two other dates still loom over budget negotiations.
On March 2, $1 trillion in spending cuts will automatically be triggered if Congress does not act.
Also, on March 27, federal spending will expire completely and halt the functioning of the government.