US Senate, House still at odds as default looms

Pres­i­dent Barack Obama talks about the ongo­ing bud­get ceil­ing nego­ti­a­tions Fri­day in the Diplo­matic Recep­tion Room of the White House in Wash­ing­ton. (Asso­ci­ated Press | Pablo Mar­tinez Monsivais)

Asso­ci­ated Press

WASHINGTON — U.S. law­mak­ers, fac­ing a poten­tially calami­tous gov­ern­ment default in just days, held votes Fri­day that high­lighted their intense par­ti­san divide and did lit­tle to end a tor­tur­ous polit­i­cal standoff.

The Republican-led House of Rep­re­sen­ta­tives approved a plan to tem­porar­ily raise the government’s bor­row­ing author­ity, know­ing it was headed to cer­tain defeat in the Democratic-controlled Sen­ate. Less than two hours later, the Sen­ate voted it down.

Top con­gres­sional lead­ers and the White House now have lit­tle time to work out a com­pro­mise that can pass both cham­bers of Con­gress and be signed by Pres­i­dent Barack Obama before a Tues­day dead­line to avoid default.

Prospects for a com­pro­mise were com­pli­cated by last-minute changes to the House bill made by Repub­li­can lead­ers Fri­day to win over rebe­lious mem­bers of their party.

Tues­day is when the gov­ern­ment says it will run out of money to meet its finan­cial oblig­a­tions. It needs Con­gress to approve an increase in its bor­row­ing author­ity, known as the debt ceil­ing. Past increases have been rou­tine, but Repub­li­cans, cit­ing the giant U.S. deficit, have demanded huge cuts as a con­di­tion for approv­ing the increase.

Democ­rats have agreed to major cuts, but are insist­ing that the debt issue be set­tled now and not come up again duirng the Novem­ber 2012 elec­tions to pre­vent another poten­tial default dur­ing the heat of the campaign.

House Repub­li­cans want a short-term increase and another vote next year. In a last-minute addi­tion to its bill, the House would require a sec­ond increase unless Con­gress approves a bal­anced budget-amendment to the Con­sti­tu­tion and sends it to the states for ratification.

Democ­rats have strongly opposed that pro­vi­sion, which has lit­tle chance of win­ning con­gres­sional approval.

A U.S. default default would have a rip­ple effect on the global econ­omy and send inter­est rates soar­ing. Already, con­cerns about the impasse have sent world stock mar­kets spi­ral­ing lower.

Just after the Sen­ate vote, Demo­c­ra­tic leader Harry Reid sig­naled he would push ahead with his own plan even though it, too, had lit­tle chance of pass­ing when it reaches the House.

Both the Repub­li­can and Demo­c­ra­tic bills, how­ever, could pro­vide the basis for behind-the-scenes talks by con­gres­sional lead­ers aimed at find­ing a bipar­ti­san com­pro­mise that could win approval in both cham­bers before Tuesday’s deadline.

The top Repub­li­can in the House, Speaker John Boehner, had hastily reworked his pro­posal to cut spend­ing and raise the government’s bor­row­ing author­ity after oppo­si­tion from his party’s most con­ser­v­a­tive mem­bers forced him to post­pone votes twice in two pre­vi­ous days.

The House vote was 218–210, almost entirely along party lines.

The House plan would have pro­vided a quick $900 bil­lion increase in U.S. bor­row­ing author­ity — essen­tial to allow­ing the gov­ern­ment to con­tinue pay­ing the bills — along with $917 bil­lion in cuts from fed­eral spending.

The bill had been rewrit­ten a con­ces­sion to tea party-backed con­ser­v­a­tives and oth­ers who had thwarted Boehner’s attempt to pass the bill Thurs­day night, upend­ing his endgame strat­egy. The changes also fur­ther alien­ated Democ­rats and com­pli­cated prospects of a com­pro­mise that could clear both houses.

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

The Sen­ate Repub­li­can leader, Mitch McConnell, 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 set a vote to reject Reid’s pro­posal on Sat­ur­day. The Sen­ate set a test vote for 1 a.m. on on Sun­day, a middle-of-the-night roll vote 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 Repub­li­can ranks — “the last hold­outs of the tea party,” Sen. Richard Durbin called them.

The day’s eco­nomic news began on a down­beat: The econ­omy grew at an annual rate of only 1.3 per­cent in the sec­ond quar­ter of the year.

Investors weren’t impressed with either the econ­omy or the efforts in Wash­ing­ton. Stocks con­tin­ued a week­long slide that erased nearly 540 points from the Dow Jones indus­trial aver­age. The Dow closed with a loss of 97 points, or 0.8 per­cent, to 12,143.

At the White House, Obama cited the poten­tial toll on the econ­omy as he urged law­mak­ers to find a way out of grid­lock, declar­ing that “we’re almost out of time.”

“The power to solve this is in our hands on a day when we’ve been reminded how frag­ile the econ­omy already is,” the pres­i­dent said from the White House, as U.S. stocks fell in response to a sour report on eco­nomic growth and wide­spread uncer­tainty over the Wash­ing­ton debt stale­mate. “This is one bur­den we can lift our­selves. We can end it with a sim­ple vote.”

Posted by AP News on Jul 29 2011. You can follow any responses to this entry through the RSS Feed. Comments can be made below.