- POSTED: 12 Feb 2014 07:48
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US Republicans capitulated on Tuesday to President Barack Obama's call to extend the nation's borrowing authority with no strings attached, dialling back the threat of an election-year fiscal showdown.
WASHINGTON: US Republicans capitulated on Tuesday to President Barack Obama's call to extend the nation's borrowing authority with no strings attached, dialling back the threat of an election-year fiscal showdown.
The House of Representatives narrowly approved a measure to suspend the US debt ceiling until March 2015. It now moves to the Senate, which could act on it as early as this week.
A relatively drama-free extension of borrowing authority without other conditions attached would mark a shift away from the confrontations in recent years that brought the world's largest economy to the brink of default and shuttered the US government for 16 days last October.
It could also avoid the turmoil that rocked US and international markets during the previous debt limit fights.
House Speaker John Boehner, unable to gain sufficient support from his fractured party for a plan he unveiled Monday that would have tied the debt limit to a revision of military pension benefits, introduced the debt ceiling bill knowing it would need support from nearly all Democrats in order to pass.
The legislation passed by 221 votes to 201, a clear victory for Obama in the wake of the shutdown that Americans blamed largely on Republicans.
Boehner said it was "a lost opportunity," telling reporters that the two parties could have "worked together" to find cuts and reforms equal to or greater than the increase in the debt limit.
Vice President Joe Biden described Boehner's stand-down as "a victory for the country."
Boehner, the top Republican in Congress, said Obama was clearly "the one driving up the debt," currently at $17.3 trillion, and that the president will need to own it as lawmakers gear up for campaign season ahead of November's mid-term elections.
The measure now heads to the Senate. Legislation there can bog down in procedural votes, and a delay would risk the government's ability to pay all of its bills.
Senate Republicans Rand Paul, Lindsey Graham and Roy Blunt said they were "no" votes, but they conceded there was no consensus as to whether to try and block the legislation.
Even if extending the debt limit halts the cycle of political brinkmanship, Blunt was firm on his position that extending borrowing authority should come with deficit-reduction measures.
"Increasing the debt ceiling without changing behavior is not a good idea," he said.
Meanwhile, US stocks added more than one per cent on Tuesday, supported both by the Boehner announcement and Federal Reserve chief Janet Yellen's steady-as-she goes monetary policy comments in her first congressional testimony in her new role.
The White House has insisted for weeks that raising the debt ceiling was non-negotiable, and it did not want to see policy riders attached.
Boehner stressed that Democratic Minority Leader Nancy Pelosi would need to rally her own troops in order to get borrowing extension authority through the House.
"I made it clear to Miss Pelosi yesterday that if we went this route, I would expect virtually every Democrat to vote for it, and she agreed."
Lawmakers have little wiggle room.
Congress is scheduled for a recess next week, leaving a handful of legislative days until the February 27 deadline, when the US Treasury estimates it will exhaust existing borrowing capacity.
Raising the debt ceiling has led to toxic congressional battles in recent years, especially after Boehner in 2011 demanded Washington match any debt ceiling increase with equally-sized budget reductions.
Boehner's earlier plan would have scrapped a budget measure approved in December that slows the pace of raises in military pensions for certain retirees.
It was one of several sweeteners he floated to fellow Republicans, including tying the debt ceiling to constructing the Keystone XL pipeline, or to changes in Obamacare.
Several conservatives baulked, and with Republicans unsure if Democrats would have gone along with the latest offer, Boehner was left with little choice but to throw in the towel or risk default.