The House of Representatives has passed an increase in the US government’s debt limit, after the Republicans gave up on their attempt to win concessions from the Democrats in return.
The House voted 221-201 to waive the $17.2 trillion debt limit for just over a year, with only 28 Republicans joining most of the Democrats.
Officials had said the US could breach the debt limit by the end of February.
The White House and others had warned of calamity if the US defaulted.
The bill, when signed into law by President Barack Obama, will enable the US government to borrow money to fund its budget obligations and debt service.
The US government will run a budget deficit of about $514 billion in its 2014 fiscal year.
The House of Representatives has passed an increase in the US government’s debt limit
The Republicans hold a majority in the House, and many had hoped to leverage their ability to block an increase in the government’s borrowing limit to win policy concessions from Barack Obama and the Democrats who control the Senate.
In the current and past debt limit fights, the Republican Party’s wish-list has included extensive budget cuts, measures that would repeal or undermine Barack Obama’s signature healthcare reform, a proposal to force the president to approve the Keystone XL oil pipeline from Canada, a repeal of recent cuts to pensions for working-age military retirees, and more.
“He will not engage in our long-term spending problem,” Republican House Speaker John Boehner told reporters earlier on Tuesday.
“So let his party gives him the debt ceiling increase that he wants.”
As in the last major Washington DC budget brawl, in September and October, Barack Obama and the Democrats said they would refuse to negotiate over the borrowing limit, arguing raising the limit amounted to the US government making good on spending it had already undertaken.
They demanded a “clean” bill that would raise the debt ceiling without enacting additional policy measures.
The Republican House leadership, often at odds with its restive caucus, floated a plan on Monday that would tie the debt limit increase to restoring a cut in pensions for working-age military retirees that was enacted as a money-saving measure in a recent budget.
But they found they lacked the Republican votes to pass that, as conservative members balked.
A separate vote is planned on that issue. The Senate has already passed a bill to restore the cuts.
[youtube 0JYKz391-Gw 650]
Treasury Secretary Jack Lew has warned the US may default on its debt by the end of the month if Congress does not raise its borrowing limit.
Jack Lew said he could rely on emergency measures to pay US debts after the limit is reinstated on February 7.
But he anticipated the treasury’s reserves would quickly be exhausted as it issues annual income tax refunds.
Congress suspended the debt limit in October as part of a deal to reopen the federal government after a shutdown.
The $16.7 trillion cap will be reinstated on Friday.
“Without borrowing authority, at some point very soon, it would not be possible to meet all of the obligations of the federal government,” Jack Lew said at the Bipartisan Policy Center in Washington on Monday.
Treasury Secretary Jack Lew has warned the US may default on its debt by the end of the month if Congress does not raise its borrowing limit
The treasury secretary said the US treasury department could resort to accounting mechanisms to avoid breaching the limit until the end of February.
But soon after, the US will only be able to pay its debt and other obligations with cash on hand.
And in the spring, Jack Lew noted, the US issues tax refunds to Americans who overpaid income taxes last year, straining its cash reserves.
While Republicans have in the past demanded budget cuts in return for agreeing an increase in the borrowing limit, the party’s leaders have signaled reluctance to do so this time around.
In any case, the White House has said it will not negotiate budget policy in exchange for raising the debt limit.
Jack Lew argued that dramatically cutting back on the federal government’s spending was unnecessary for the moment.
“I’m not sure this is the year for the long-term fiscal challenge to be dealt with,” he said, adding the US deficit had been declining.
“I actually believe that we’ve made so much progress in the short and medium term, we have a little time to deal with the longer term.”
During the partial government shutdown in October, Republican lawmakers threatened to block a rise in the debt limit unless the Democrats agreed to undermine or repeal President Barack Obama’s signature healthcare reform law.
The US government is to reopen after Congress has passed a bill to raise the federal debt limit, with hours to spare before the nation risked default.
The Democratic-controlled Senate passed the measure by 81 votes to 18, and the Republican-controlled House of Representatives by 285 votes to 144.
Despite reluctant support from the House Republican leadership, most of the party’s lawmakers voted against it.
It came hours before the deadline to raise the $16.7 trillion limit.
The bill yanked the US back from the brink of a budgetary abyss by extending the treasury’s borrowing authority until February 7.
It also funds the government to January 15, reopening closed federal agencies after 16 days of partial government shutdown and bringing hundreds of thousands of employees back to work.
President Barack Obama signed the bill into law early on Thursday morning.
The US government is to reopen after Congress has passed a bill to raise the federal debt limit, with hours to spare before the nation risked default
The White House budget office said federal workers should return to work on Thursday.
The deal, however, offers only a temporary solution and does not resolve the budgetary issues that fiercely divide Republicans and Democrats.
President Barack Obama warned that US lawmakers must “earn back the trust of the American people”.
“We’ve got to get out of the habit of governing by crisis,” Democratic Barack Obama added, speaking after the Senate vote on Wednesday evening.
“My hope and expectation is everybody has learned there’s no reason why we can’t work on the issues at hand, why we can’t disagree between the parties without still being agreeable and make sure that we’re not inflicting harm on the American people when we do have disagreements.”
Also speaking after the first vote, Senate Democratic Majority leader Harry Reid said: “Let’s be honest, this is pain inflicted on a nation for no good reason and we cannot, cannot make the same mistake again.”
The US Treasury has been using what it called “extraordinary measures” to pay its bills since the nation reached its current debt limit in May.
It said those methods would be exhausted by October 17, leaving the US unable to meet all of its debt and other fiscal obligations.
Politicians, bankers and economists had warned of dire global economic consequences unless an agreement to raise the US government’s borrowing limit was reached.
Meanwhile, ratings firm Standard & Poor’s said on Wednesday that the partial US government shutdown, the first in 17 years, had already shaved $24 billion from the American economy and would cut growth significantly in the fourth quarter.
[youtube 4Wd7xhFd8bo 650]
