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House approves debt bill; Senate rejects it

WASHINGTON (AP) - 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
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
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
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
But Carney said the administration did not plan to provide the
public with details Friday on how the government will prioritize
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
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

(Copyright 2011 by The Associated Press. All Rights Reserved.)

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