US Senate blocks latest Republican debt plan

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

The Republican-led House of Representatives yesterday 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 yesterday to win over rebellious 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 US 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 during 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 US 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. In the Senate, the vote was 59-41, with all Democrats, two independents and six Republicans joining in opposition.

The House plan would have provided a quick $900 billion increase in US 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 with 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 alienated Democrats only further.

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 am 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 per cent in the second quarter of the year.

Investors weren't impressed with either the economy or the efforts in Washington. The Dow fell again yesterday, with a loss of 0.8 percent, continuing a weeklong slide that erased nearly 540 points off the index, which closed at 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." AP

Start your day with The Independent, sign up for daily news emails
newsAnother week, another dress controversy on the internet
Life and Style
Scientist have developed a test which predicts whether you'll live for another ten years
Life and Style
Marie had fake ID, in the name of Johanna Koch, after she evaded capture by the Nazis in wartime Berlin
historyOne woman's secret life as a Jew in wartime Berlin
news... and what your reaction to the creatures above says about you
Have you tried new the Independent Digital Edition apps?
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Telesales & Customer Service Executive - Call Centre Jobs

£7 - £9 per hour: Recruitment Genius: Are you outgoing? Do you want to work in...

Ashdown Group: Finance Manager - Covent Garden, central London - £45k - £55k

£45000 - £55000 per annum + 30 days holiday: Ashdown Group: Finance Manager - ...

Ashdown Group: Systems Administrator - Lancashire - £30,000

£28000 - £30000 per annum: Ashdown Group: 3rd Line Support Engineer / Network ...

Recruitment Genius: Graduate Web Developer

£26000 - £33000 per annum: Recruitment Genius: A Web Developer is required to ...

Day In a Page

Syrian conflict is the world's first 'climate change war', say scientists, but it won't be the last one

Climate change key in Syrian conflict

And it will trigger more war in future
How I outwitted the Gestapo

How I outwitted the Gestapo

My life as a Jew in wartime Berlin
The nation's favourite animal revealed

The nation's favourite animal revealed

Women like cuddly creatures whilst men like creepy-crawlies
Is this the way to get young people to vote?

Getting young people to vote

From #VOTESELFISH to Bite the Ballot
Poldark star Heida Reed: 'I don't think a single bodice gets ripped'

Poldark star Heida Reed

'I don't think a single bodice gets ripped'
The difference between America and Israel? There isn’t one

The difference between America and Israel? There isn’t one

Netanyahu knows he can get away with anything in America, says Robert Fisk
Families clubbing together to build their own affordable accommodation

Do It Yourself approach to securing a new house

Community land trusts marking a new trend for taking the initiative away from developers
Head of WWF UK: We didn’t send Cameron to the Arctic to see green ideas freeze

David Nussbaum: We didn’t send Cameron to the Arctic to see green ideas freeze

The head of WWF UK remains sanguine despite the Government’s failure to live up to its pledges on the environment
Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Set in a mythologised 5th-century Britain, ‘The Buried Giant’ is a strange beast
With money, corruption and drugs, this monk fears Buddhism in Thailand is a ‘poisoned fruit’

Money, corruption and drugs

The monk who fears Buddhism in Thailand is a ‘poisoned fruit’
America's first slavery museum established at Django Unchained plantation - 150 years after slavery outlawed

150 years after it was outlawed...

... America's first slavery museum is established in Louisiana
Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

The first 'American Idol' winner on how she manages to remain her own woman – Jane Austen fascination and all
Tony Oursler on exploring our uneasy relationship with technology with his new show

You won't believe your eyes

Tony Oursler's new show explores our uneasy relationship with technology. He's one of a growing number of artists with that preoccupation
Ian Herbert: Peter Moores must go. He should never have been brought back to fail again

Moores must go. He should never have been brought back to fail again

The England coach leaves players to find solutions - which makes you wonder where he adds value, says Ian Herbert
War with Isis: Fears that the looming battle for Mosul will unleash 'a million refugees'

The battle for Mosul will unleash 'a million refugees'

Aid agencies prepare for vast exodus following planned Iraqi offensive against the Isis-held city, reports Patrick Cockburn