Fri, Jul 29, 2011 - Page 1 News List

Bill to cut deficit to face tight vote in split US Congress

Reuters, Washington

A bill to cut the US deficit was to face a nail-bitingly close vote in Congress yesterday as the top Republican lawmaker sought to quell an internal revolt and push his plan to avoid a ruinous default.

Approval of a plan by House of Representatives Speaker John Boehner would break the inertia in Washington over a US debt crisis that has spooked markets and raised the prospect that the government of the world’s largest economy will run out of money to pay its bills in less than a week.

US President Barack Obama has threatened to veto the bill and a majority of the Democratic-controlled Senate has vowed to vote against it, but a successful vote in the House would give the bill legitimacy and make it a crucial element of the legislative chess game that is likely to play out until Tuesday’s deadline.

A defeat of the bill could deepen the crisis, swinging the momentum toward a rival Democratic plan in the Senate, but leaving no clear way to overcome entrenched opposition from fiscally conservative “Tea Party” Republicans in the House.

With brinksmanship over the ideologically charged dispute seeming likely to go on through the weekend, investors and ordinary Americans are increasingly nervous that a previously unthinkable US default could spark a new financial crisis.

The US Treasury says it will run out of spending money on Tuesday unless Congress agrees to raise the US$14.3 trillion debt ceiling. Even if an 11th-hour compromise emerges, the US could lose its top-notch credit status if ratings agencies are not convinced it has done enough to address its bulging debt burden.

Several House Democrats planned to hold a news conference yesterday to urge Obama to take that option if necessary.

“The only option here is for Congress to do its job,” senior White House adviser David Plouffe said on the PBS show NewsHour. “We’ve run out of excuses and we’re running out of time.”

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