Congress sends bill to Obama averting govt default

DAVID ESPO

AP Spe­cial Correspondent

WASHINGTON — Con­gress sent Pres­i­dent Barack Obama drama-free leg­is­la­tion on Thurs­day rais­ing the debt ceil­ing, avert­ing a gov­ern­ment default and putting off the next tax-and-spending clash between the White House and Repub­li­cans until later in the year.

The mea­sure cleared the Sen­ate on a vote of 64–34 after win­ning House approval late last week. It per­mits the Trea­sury to bor­row above the cur­rent $16.4 tril­lion debt limit through May 18. The White House has said Obama will sign it.

“Fail­ure to pass this bill will set off an unpre­dictable finan­cial panic that would plunge not only the United States but much of the world back into reces­sion,” Sen. Max Bau­cus, D-Mont., said before the vote. “Every sin­gle Amer­i­can would feel the eco­nomic impact.”

But Repub­li­can leader Mitch McConnell said in remarks on the Sen­ate floor that “gov­ern­ment spend­ing is com­pletely out of con­trol — and it’s pro­jected to get much worse in years to come.” His office issued a state­ment shortly after the vote say­ing he had opposed the leg­is­la­tion after Democ­rats tor­pe­doed sev­eral GOP attempts to rein in spend­ing before final passage.

The leg­is­la­tion reflects a switch in strat­egy by Repub­li­cans, whose insis­tence on deep spend­ing cuts as a trade-off for a higher debt limit more than a year ago pushed the gov­ern­ment to the brink of an unprece­dented default. With polls show­ing their pub­lic sup­port lag­ging, they now look ahead to a new sea­son of poten­tial show­downs, with a reshuf­fled bat­ting order that moves the threat of a default to the back of a line that includes March 1 across-the-board spend­ing cuts and the March 27 expi­ra­tion of fund­ing for most fed­eral agencies.

The debt limit mea­sure came with only one string attached by House Repub­li­cans, a pro­vi­sion that would tem­porar­ily with­hold the pay of law­mak­ers in either house that failed to pro­duce a bud­get this year.

That was designed as a prod to the Sen­ate, where major­ity Democ­rats have failed to bring a bud­get to a vote in any of the past three years. This year, they say they will. Repub­li­cans say they are eager for a com­par­i­son of plans, rather than a long year spent defend­ing one of their own.

Already, the next con­flict over bud­get pri­or­i­ties is tak­ing shape, in an envi­ron­ment includes a fresh report that the econ­omy unex­pect­edly declined in the last quar­ter, and the emer­gence of a warn­ing from the Pentagon’s top uni­formed offi­cers that pend­ing defense cuts could lead to a “hol­low force.”

With­out changes, “we will have to ground air­craft, return ships to port, and stop dri­ving com­bat vehi­cles in train­ing,” mem­bers of the Joint Chiefs of Staff wrote con­gres­sional lead­ers in a let­ter dated Jan. 14.

Obama and Democ­rats say they are pre­pared for fur­ther deficit reduc­tion com­pro­mise, although they stress they want increased tax rev­enue as part of any deal.

Repub­li­cans want spend­ing cuts only, after reluc­tantly swal­low­ing $600 bil­lion in higher taxes as part of a “fis­cal cliff” com­pro­mise late last year.

To fur­ther their goals, House Repub­li­cans intend to pro­duce a bud­get that bal­ances in a decade, and are expected to vote as early as next week to demand Obama do the same.

Obama’s bud­get is due to be made pub­lic later this month, although there is no expec­ta­tion it will elim­i­nate red ink in the next 10 years. Nor are major­ity Democ­rats in the Sen­ate expected to do so either.

In the mean­time, though, they are likely to pro­pose leg­is­la­tion in the next few weeks to replace the loom­ing across-the-board cuts with a series of tar­geted reduc­tions and higher taxes.

In all, 50 Democ­rats, 12 Repub­li­cans and two inde­pen­dents voted in favor of the debt limit bill, while 33 Repub­li­cans and Demo­c­ra­tic Sen. Joe Manchin of West Vir­ginia opposed it.

In the run-up to the final vote, a pro­posal by Repub­li­can Sen. Rob Port­man of Ohio to require dollar-for-dollar spend­ing cuts on any future debt limit increases was cast aside, 54–44.

“Amer­ica must pay its bills — no one is argu­ing against that point,” Port­man said in a state­ment issued after the bill’s pas­sage. “What we are debat­ing is how to shrink those bills mov­ing for­ward so the fed­eral gov­ern­ment doesn’t con­tinue max­ing out its credit card and sell­ing out future generations.”

Also blocked was an attempt by the Ohio Repub­li­can, who served as bud­get direc­tor under Pres­i­dent George W. Bush, to guar­an­tee that the gov­ern­ment stay open — at reduced spend­ing lev­els — even if fund­ing expires in the future. The vote was 52–46.

Sen. Pat Toomey of Penn­syl­va­nia authored a pro­posal to give pri­or­ity to pay­ment of prin­ci­pal and inter­est on the debt, Social Secu­rity ben­e­fits and mil­i­tary pay in the event the debt limit is reached in the future. It failed on a wider, bipar­ti­san vote of 79–19.

Trea­sury Depart­ment offi­cials said that as soon as Obama signs the debt limit leg­is­la­tion, Trea­sury will begin tak­ing steps to reverse the mea­sures it has been tak­ing over the past month to avoid exceed­ing the cur­rent debt limit, which was reached on Dec. 31.

Trea­sury has the abil­ity to cre­ate about $200 bil­lion in head­room pri­mar­ily by tap­ping funds from gov­ern­ment employee pen­sion funds. Trea­sury said it will restore the money that was diverted with inter­est once the debt leg­is­la­tion is signed. That will allow the same mea­sures to be used once again if needed when the cur­rent debt author­ity runs out on May 18.

Posted by AP News on Jan 31 2013. You can follow any responses to this entry through the RSS Feed. Comments can be made below.