published Saturday, July 30th, 2011

House approves debt bill; Senate rejects it

By DAVID ESPO

AP Special Correspondent

WASHINGTON — In an unforgiving display of partisanship, the Republican-controlled House approved emergency legislation Friday night to avoid an unprecedented government default and Senate Democrats scuttled it less than two hours later in hopes of a better deal.

“We are almost out of time” for a compromise, warned President Barack Obama as U.S. financial markets trembled at the prospect of economic chaos next week. The Dow Jones average fell for a sixth straight session.

Lawmakers in both parties said they were determined to avoid a default, yet there was little evidence of progress — or even significant negotiations — on a compromise during a long day of intense political maneuvering.

The House vote was 218-210, almost entirely along party lines, on a Republican-drafted bill to provide a quick $900 billion increase in U.S. borrowing authority — essential to allow the government to continue paying all its bills — along with $917 billion in cuts from federal spending.

It had been rewritten hastily overnight to say that before any additional increase in the debt limit could take place, Congress must approve a balanced-budget amendment to the Constitution and send it to the states for ratification. That marked a concession to tea party-backed conservatives and others in the rank and file who had thwarted House Speaker John Boehner’s attempt to pass the bill Thursday night.

“Today we have a chance to end this debt limit crisis,” Boehner declared, his endgame strategy upended by rebels within his own party.

But the changes he made to the House GOP bill further alienated Democrats. And they complicated prospects of a compromise that could clear both houses and win Obama’s signature by next Tuesday’s deadline.

At the other end of the Capitol, Senate Democrats rejected the measure without so much as a debate. The vote was 59-41, with all Democrats, two independents and six Republicans joining in opposition.

Moments later, Senate Majority Leader Harry Reid, D-Nev., unveiled an alternative that would cut spending by $2.4 trillion and raise the debt limit by the same amount, enough to meet Obama’s terms that it tide the Treasury over until 2013.

Reid invited Republicans to suggest changes, saying, “This is likely our last chance to save this nation from default.”

The Senate GOP leader, Mitch McConnell of Kentucky, accused Democrats of “rounding up ‘no’ votes to keep this crisis alive,” and noted the House had passed two bills to raise the debt limit and the Senate none.

The House, eager to return the Senate’s favor rejecting the Boehner bill, set a vote to reject Reid’s proposal on Saturday. The Senate set a test vote at about 1 a.m. on Sunday, a middle-of-the-night roll call that underscored the limited time available to lawmakers.

At the same time Reid appealed for bipartisanship, he and other party leaders accused Boehner of caving in to extremists in the GOP ranks — “the last holdouts of the tea party,” Sen. Richard Durbin of Illinois called them.

Republicans conceded that the overnight delay had weakened Boehner’s hand in the endgame with Obama and Senate Democrats.

But the Ohio Republican drew applause from his rank and file when he said the House, alone, had advanced legislation to cut deficits, and that he had “stuck his neck out” in recent weeks in hopes of concluding a sweeping deficit reduction deal with Obama.

Boehner’s measure would provide a quick $900 billion increase in borrowing authority — essential for the U.S. to keep paying all its bills after next Tuesday — and $917 billion in spending cuts. After the bill’s latest alteration, any future increases in the debt limit would be contingent on Congress approving the constitutional amendment and sending it to the states for ratification.

“With conservatives insisting on the addition of a balanced-budget amendment requirement, Speaker Boehner’s bill will now cut, cap and balance” federal spending, said Rep. Jeff Flake of Arizona as Friday’s scheduled vote approached.

The White House called the bill a nonstarter. Press secretary Jay Carney issued a statement that called it a “political exercise” and said congressional leaders should turn their efforts to a compromise that Obama can sign by Tuesday.

The developments occurred one day after Boehner was forced to postpone a vote in the House for fear the earlier version of his measure would suffer a defeat. But by forcing a delay the conservative rebels upended the leadership’s strategy of making their bill the only one that could clear Congress before a default and win Obama’s reluctant signature.

“Everybody acknowledges that because of the dust-up yesterday we’ve lost some leverage,” said Rep. Steven LaTourette, R-Ohio, an ally of the speaker.

The rebels said they were more worried about stemming the nation’s steady rise of red ink.

Rep. Jeff Landry, R-La., a, a first-term lawmaker, issued a statement saying his pressure had paid off.

“The American people have strongly renewed their November calls of bringing fiscal sanity to Washington. I am blessed to be a vehicle driving their wishes to fruition,” he said. “This plan is not a Washington deal but a real solution to fundamentally change the way Washington operates.”

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.

Executives from the country’s biggest banks met with U.S. Treasury officials to discuss how debt auctions will be handled if Congress fails to raise the borrowing limit before Tuesday’s deadline.

But Carney said the administration did not plan to provide the public with details Friday on how the government will prioritize payments.

The day’s economic news wasn’t very upbeat to begin with — an economy that grew at an annual rate of only 1.3 percent in the second quarter of the year.

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.

At the White House, Obama cited the potential toll on the economy as he urged lawmakers to find a way out of gridlock.

He said that for all the partisanship, the two sides were not that far apart. Both agree on initial spending cuts to take effect in exchange for an increase in the debt limit, he said, as well as on a way to consider additional reductions in government benefit programs in the coming months.

“And if we need to put in place some kind of enforcement mechanism to hold us all accountable for making these reforms, I’ll support that, too, if it’s done in a smart and balanced way,” he said.

That went to the crux of the conflict — his insistence that Congress raise the government’s borrowing authority by enough to avoid a repeat of the current crisis during the heat of the 2012 election campaigns.

Republicans have resisted, accusing him of injecting purely political considerations into the debt limit negotiations.

But Boehner’s failure to line up the votes for his legislation Thursday night seemed to embolden Democrats.

Obama asked his 9.4 million followers on Twitter to send tweets to Republican lawmakers.

“The time for putting party first is over. If you want to see a bipartisan (hash)compromise, let Congress know. Call. Email. Tweet,” Obama wrote in a tweet, signed “-BO.”

———

Associated Press writers Andrew Taylor, Donna Cassata, Alan Fram, Jim Kuhnhenn, Erica Werner and Ben Feller contributed to this report.

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Facts said...

Sen. Bob Corker has hit the nail on the head. The crisis is the downgrade because we're spending too much. In reading his opinions, there's not a plan passed or planned that "goes far enough" to prevent a problem. So Democrat, Republican, Independent, whatever, we've got to stop spending federal money. There was a whole lot of work for absolutely no progress and the fault lies with the incumbents, all of them that won't support cuts.

July 30, 2011 at 7:40 a.m.
BOOBOO99 said...

John Boehner is an idiot,His plan would make the rich richer and the Poor more poor. All this started when George W Bush when he destroyed Iraq and slaughtered thousands famlies in iraq for his own benefit. Now we are rebuilding iraq instead of rebuilding America.. Now Boehner is trying to get rid of social security and tax the poor to their grave while giving the rich tax breaks. The American people needs vote out these people.. We need to raise the debt ceiling so our retired people will get their checks and so our military families can eat and pay their bills.. I hope Obama Monday take the 14th Admendment and pass this bill own his own. Obama is for the main street people not like the republican who are for Wall Street and the rich. Im not a Democrat or Republican , Im an American. Peace

July 30, 2011 at 8:17 a.m.
rolando said...

I say let us go as we are beyond 2 Aug. We have more than enough coming in to pay the interest on our debts, Social Security, Medicare, and Military Pay with tens of billions left over.

Prioritize? Bull shot. That's just rhetoric.

Cut off everything but the essentials -- free everything for illegal aliens would be a start -- billions right there. Biofuel/oil subsidies for another. More billions.

But the Dims don't want any of that. All they want is more money to spend forever and ever without end, Amen.

July 30, 2011 at 10:18 a.m.
328Kwebsite said...

I'm glad to see that so many people in the Republican party, like local Tea Party members, agree with PayGo. It was the correct thing to do. We accept their apology for repealing PayGo. We understand that they admit their intellectual wrongness for every single financial policy since 1995.

We hope to see the repeal of the Bush Tax Cuts for the Wealthy.

We are also surprised to learn that the House plan got any approvals at all. We hope someone will apologize to us for taking nearly two hours to flush that trash from the system. We continue to acknowledge President Obama's outstanding leadership and conduct during this process.

We reject Republican notions of destroying LBJ's Great Society. We're surprised that they haven't admitted their faults through their decision to refinance public housing in a way that caused this recent crisis; we're all aware that they're been telling so many fictions about money for so long that they've begun to believe their own fairy tales about assets and liabilities. We continue to support Democrats because they have concentrated on Owner's Equity.

We recognize that the Republicans' main political stance with respect to the debt ceiling has been to preserve The Bush Tax Cuts for the Wealthy, at the expense of anything and everything else.

Raise the debt ceiling. Repeal the Bush Tax Cuts for the Wealthy immediately. Reinstitute PayGo as a part of reigning in Republican socialist looting of tax dollars for their rich-entitled self-payments.

Republican spending plans: today's food stamps for the wealthy. Republicans have been showing us through their policies that they believe in entitlements. Republicans have been telling us loudly and clearly that they believe the rich are entitled to everything and workers who are building their small businesses up from scratch are entitled to nothing.

Democratic lawmakers: reasonable and intelligent builders of budgets and spending plans that support a traditional view of business based on Owner's Equity. Too bad Republicans can't take yes for an answer. They can't afford to, financially; they've been lying about money for so long that they can become affluent enough to admit their bankrupt dealings.

We remain proud and staunch supporters of President Obama throughout this Tea Party Republican publicity circus.

July 30, 2011 at 11:36 a.m.
fairmon said...

Congress is doing nothing to increase employment opportunities. Concentrate on jobs until only those not working are by choice, too elderly, too young or disabled. Eliminate all tax deductions and other exceptions. every body pay with an income pay something.

July 30, 2011 at 3:29 p.m.
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