The Senate narrowly averted financial calamity Tuesday by passing legislation to raise the federal borrowing limit by $2.5 trillion.

       All Democrats voted to raise the debt limit. No Republicans joined them.

       The legislation heads to the House next, where it is expected to pass. Once signed by President Joe Biden, the congressional action will have prevented a U.S. default that could have halted Social Security and veterans' payments, hiked interest on mortgages and loans and disrupted the global economy.

       MORE: Congressional leaders reach deal to avert debt ceiling crisis

       The Treasury Department predicted that the U.S. would be unable to pay its bills come Wednesday.

       Carolyn Kaster/AP

       Senate Majority Leader Chuck Schumer of N.Y., speaks during a news conference after the weekly Democratic policy luncheon on Capitol Hill in Washington, Dec. 7, 2021.

       Congressional action was the last step in a months-long process aimed at raising the federal borrowing limit.

       In October, Republican and Democratic leadership locked horns over the spending cap. Though both parties acknowledged the necessity of raising the debt limit, Republicans argued that Democrats ought to raise the limit on their own -- wrongly claiming they needed to offset the cost of Biden's yet-to-be passed $1.75 trillion social spending bill.

       Democrats, who helped raise the debt limit multiple times under the Trump administration, insisted it be a bipartisan effort since the debt limit had to be raised to cover past spending.

       MORE: What's next for legislation on the US debt ceiling?

       The October dispute ended in the GOP blinking, with Republicans giving Democrats the votes necessary for a short-term raise to the debt limit, but vowing they'd be less cooperative in the winter.

       Drew Angerer/Getty Images

       Senate Minority Leader Mitch McConnell walks to the Senate Chamber at the Capitol, Dec. 2, 2021.

       Last week, however, party leaders announced an agreement on a two-step process to raise the debt limit. Republicans ultimately provided 10 votes to permit a one-time rule change altering the number of votes necessary to pass the debt-limit hike, and clearing a path for Democrats to pass the legislation without a single GOP backer.

       The reached agreement required Democrats to name a specific amount they want to raise the debt limit by. They settled on $2.5 trillion -- enough to prevent the government from defaulting through early 2023, Majority Leader Chuck Schumer said Tuesday.