Dealing with Debt
House passes GOP debt bill; Senate says no
The House on Friday approved a conservative Republican plan linking an increase in the nation's debt ceiling to the highly unlikely passage of a balanced-budget amendment to the Constitution.
WASHINGTON — The House on Friday approved a conservative-Republican plan linking an increase in the nation's debt ceiling to the highly unlikely passage of a balanced-budget amendment to the Constitution.
The measure passed on a 218-210 vote. No Democrats supported the measure; 22 Republicans opposed it. The Washington delegation voted along party lines, with Democrats against and Republicans for.
The GOP plan was quickly killed in the Democratic-run Senate by a 59-41 vote, with all Democrats, two independents and six Republicans joining in opposition. The Senate is expected to take up a Democratic-authored plan this weekend.
Passage of the House plan, though, was an attempt by Republicans to show where they stood, and it set the stage for the final days of intense, last-ditch negotiations, as President Obama again implored Congress to find a path "out of this mess."
If the $14.3 trillion debt limit is not raised by midnight Tuesday, the government could default on its debt, which could trigger panic in financial markets and send the nation back into recession.
While the two parties were close to agreeing on most final terms of a deficit-reduction plan, they remained split over how to increase the debt limit. Democrats want one vote on a ceiling that would increase the Treasury's borrowing authority sufficiently to last through 2012.
The House Republican plan would provide for two votes raising the ceiling: one immediately that would increase Treasury borrowing authority by about $900 billion, enough to stretch into early 2012, and a second vote after Congress approves the balanced-budget amendment.
House Speaker John Boehner, R-Ohio, defended this approach in a fiery speech to close the debate. "I stuck my neck out a mile," he said, trying to get a bipartisan agreement.
Approval of a balanced-budget amendment is highly unlikely, since it would require two-thirds approval by both houses of Congress. Democrats, who oppose the amendment as unwise because it would prevent the government from responding to economic crises, control 193 of the House's 435 seats and 53 of 100 Senate seats.
The White House is open to a two-day extension of the debt ceiling if needed to allow time for a real deal to work its way through Congress.
That could happen by having Congress pass a bill to give the Treasury Department authority to borrow enough to keep financing government to Aug. 4, or pass a bill specifying the exact dollar amount of the increase in the debt ceiling, according to Democrats familiar with debt talks.
Friday was a day of fast-moving developments. Obama said Friday morning in televised remarks from the White House that constituents should keep the pressure on Congress: "Keep it up. Let your members of Congress know. ... Keep the pressure on Washington and we can get past this."
In the Senate, Democrats said they would begin considering their own $2.2 trillion deficit-reduction plan, one unlikely to win much, if any, Republican support.
Senate Majority Leader Harry Reid, of Nevada, threatened to hold a vote to end extended debate on the plan late Saturday or early Sunday; Senate rules prohibit him forcing one sooner.
It's questionable whether his plan will survive in the Senate, since it takes 60 votes to cut off extended debate and move to a vote on passage, meaning Democrats must attract seven Republicans for Reid's plan to pass.
Still, Reid said he'd move ahead. "The deadline will not move," he said of Tuesday's deadline for raising the $14.3 trillion debt ceiling.
Some hope existed that common ground could be found. Lawmakers noted that the Reid and Boehner plans had many similarities. Both would cut discretionary spending by about $750 billion over 10 years. Neither plan would raise new revenue. And both would set up 12-member legislative committees to find new ways to reduce future deficits.
Reid's plan assumes about $1 trillion in savings from the winding down of the Iraq and Afghanistan wars, while Boehner's does not include those funds. Although Republicans included the savings as part of their budget plan in April, many now argue that such savings do not count as real future budget cuts, since the wars are winding down already.
"This is not a situation where the two parties are miles apart," Obama said. "There are plenty of ways out of this mess. But we are almost out of time."
The GOP House victory came after three days of tense negotiations with rebellious GOP conservatives, who had been reluctant to back their own Republican leaders' initial proposal.
Administration officials say that without legislation in place by Tuesday, the Treasury will no longer be able to pay all its bills. The result could inflict significant damage on the economy, they add, causing interest rates to rise and financial markets to sink.
Friday's economic news wasn't upbeat to begin with: an economy that grew at an annual rate of only 1.3 percent in the second quarter.
The Dow Jones industrial average suffered through a sixth-straight day of losses, and bond yields fell as investors sought safer investments in the event of a default.
Steven Thomma, David Goldstein, James Rosen and Halimah Abdullah contributed to this story. Material from The New York Times and The Associated Press is included in this report.
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