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US House rejects debt limit hike

Jan 19 2012 08:23 Reuters

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Washington - The US House of Representatives rejected a $1.2 trillion increase in the federal debt limit on Wednesday, in a largely symbolic vote that allowed Republicans to stake out election-year positions to bash President Barack Obama's spending record.

The Republican-controlled House voted 239 to 176 along party lines in favour of a "resolution of disapproval" against the increase sought by Obama, a Democrat, but the winning tally fell far short of the two-thirds majority needed to override a presidential veto.

The Republican effort to deny the debt limit hike - seen by Democrats as political posturing - is expected to die in the Senate, which reconvenes in Washington next week. But should it pass, Obama is poised to veto it.

The vote was also largely an academic exercise, for Congress gave Obama the authority to increase the debt limit last August as part of a deal to end a rancorous budget battle that brought the United States to the brink of default and cost it its coveted top-tier credit rating from Standard & Poor's.

Republican lawmakers used Wednesday's vote to go on record as opposing more spending increases and to cast Obama as the architect of a massive spending binge. Exploiting voter worries over the ballooning federal debt, now over $15 trillion, is a central theme of Republicans' election campaign strategy.

Spending moral high ground

During several hours of debate, a procession of Republican lawmakers railed against spending they said was ruining the US economy.

"This president, I believe, thinks that government has the answers and he wants to give the bureaucrats a blank check to move forward and spend this country into oblivion," said Ann Marie Buerkle, a freshman Republican from upstate New York.

Republican presidential candidate Ron Paul even left a contentious primary race in South Carolina to come back to Washington to vote against the higher borrowing cap.

"We ought to face up to the reality and live within our limits," Paul, a Texas congressman, said on the House floor.

Democrats countered that Republicans were mounting a political "charade" that could again put investors' faith in US Treasury debt at risk.

"If the Unites States of America were to renege on the full faith and credit of its obligations, it would be a disaster on the international economy, but that is the course of action being advocated by our Republican colleagues today," said Chris Van Hollen, the top Democrat on the House budget committee.

Other Democrats pointed out that 174 Republicans voted in favour of the budget deal last year that authorised $2.1 trillion in new borrowing capacity in three stages. Yet there were 233 Republican votes against the final $1.2 trillion portion of this and only one in favour of it.

The increase would push the US debt ceiling to $16.394 trillion. The US Treasury essentially reached the prior limit at the end of December, but has been using special accounting manoeuvers to delay the increase to allow for the vote.

In each of Obama's three years in office, the government has run up record deficits in the $1.3 trillion-plus range.

The White House argues that Obama inherited a deficit on track to exceed $1 trillion, and was forced to spend hundreds of billions of dollars to stimulate the economy to prevent the worst recession since the 1930s from becoming another Great Depression.

Obama is expected next month to try to use his 2013 budget plan to turn the tables on Republicans and cast himself as working against an obstructionist Congress to tackle deficits by reviving his proposals to slash deficits by $4 trillion.

Those plans, which were stopped in their tracks when deficit reduction talks collapsed last year, relied partly on tax hikes for the wealthy, an idea that Republicans have staunchly opposed.

us debt limit  |  us economy



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