2nd UPDATE:US House Votes To Raise Debt Ceiling By $1.9 Trillion To $14.3 Trillion
- (Adds comment from President Barack Obama in the 11th paragraph.) By Corey Boles Of DOW JONES NEWSWIRES WASHINGTON -(Dow Jones)- The U.S. House of Representatives voted largely along party lines Thursday to hike the federal government's borrowing limit by $1.9 trillion, enough to enable the Treasury Dept. to pay its bills through the rest of this year, congressional leaders said. The 217-212 vote was razor-thin, and the exact number required to approve the measure. Thirty-seven Democrats joined all Republicans in opposing the increase. The move brings the total amount the federal government can borrow to $14.3 trillion, the highest mark by a significant measure. It comes just six weeks after Congress approved a $290 billion extension to the debt ceiling to $12.4 trillion. The Senate approved the measure last week in what was also a strictly partisan vote. The legislation will now proceed to the White House for the president's approval. Voting to increase the debt ceiling is largely a theoretical matter as it represents money already spent by the Treasury Dept. But at a time when the issue of the burgeoning federal budget deficit is keenly felt by voters across the country, it is still a tough vote for lawmakers trying to portray themselves as fiscally responsible. On top of that, many lawmakers are up for reelection in November. The budget deficit reached a record $1.4 trillion in fiscal 2009, and the White House Budget Office said earlier this week it is on course to hit $1.6 trillion in the current fiscal year. Were Congress to fail to increase the debt limit, the consequences for the financial markets would be disastrous. The U.S. would face the potential of defaulting on its debt and would almost certainly lose its prized top-shelf credit rating. The federal government would have to pay substantially more to largely foreign investors already leery about the debt load carried by the country, and the value of the dollar would likely plummet. House lawmakers also voted on a measure aimed at bringing spending under control. It imposes on Congress a rule requiring any new mandatory spending to be offset by spending cuts or new revenue elsewhere in the budget. The rule, known as "pay-as-you-go" or "Paygo," was in place during the 1990s, the last time there was a federal budget surplus, and Democrats hope that it will spur a return in that direction. "The passage of statutory Paygo today will help usher out an era of irresponsibility and begin putting the country back on a fiscally sustainable path," President Barack Obama said, in a statement. At the same time Obama pledged to freeze discretionary spending levels for three years beginning in fiscal 2011. He also ordered the creation of a panel mandated with coming up with recommendations to tackle longer-term fiscal imbalances. Even with these measures, however, the government is expected to continue running large budget deficits for the next decade. In an unusual move, House leadership included the underlying increase in the borrowing limit in a routine procedural vote setting the rules of the debate on the matter. This could provide some political cover for moderate Democrats facing difficult re-election fight in November. -By Corey Boles, Dow Jones Newswires; 202-862-6601; corey.boles@dowjones.com Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=3CA7nGHkXXgBSMEavifO%2Bg%3D%3D. You can use this link on the day this article is published and the following day.
