Republicans capitulated on Tuesday to US President Barack Obama’s call to extend the nation’s borrowing authority with no strings attached, dialing 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 was to begin debating the bill yesterday.
A drama-free extension of borrowing authority without other conditions would mark a shift away from recent confrontations that brought the world’s largest economy to the brink of default, culminating in the US government being shuttered for 16 days in October last year.
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 on 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.
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” to work together to find cuts and reforms equal to the increase in the debt limit.
However, when his earlier plan collapsed he offered a debt ceiling hike with no accompanying legislation, violating his own principle, put forward in 2011, that extension of borrowing authority be accompanied with federal spending cuts in equal measure.
US Vice President Joe Biden said Boehner’s stand-down was “a victory for the country,” while the White House called the vote “a positive step in moving away from the political brinkmanship that’s a needless drag on our economy.”
Boehner said Obama was clearly “the one driving up the debt,” currently at US$17.3 trillion, and that the president will be forced to own it as lawmakers gear up for campaign season ahead of November’s mid-term elections.
“Only in Washington would the solution to a US$17 trillion national debt be an increase in our borrowing limit,” frustrated House Republican Jason Smith said.
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.
Top Senate Republican Mitch McConnell was silent on whether his members would seek to force a 60-vote threshold to advance the measure in the 100-seat body. That would require Republicans to join Democrats to move the bill forward.
“We’ll see how it plays out,” McConnell said.
Senator Roy Blunt was one of several Republicans prepared to vote no.
“Increasing the debt ceiling without changing behavior is not a good idea,” he said.
Meanwhile US stocks added more than 1 percent on Tuesday, supported both by the Boehner announcement and Federal Reserve chief Janet Yellen’s comments on monetary policy 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.
However, Boehner stressed that Democratic Minority Leader Nancy Pelosi would need to rally her own troops to get a borrowing authority extension through the House.
She pulled through, with just two Democrats voting no. Twenty-eight Republicans, including Boehner, voted for the bill.
“The full faith & credit of US should never be in jeopardy,” Pelosi tweeted after the vote.
Lawmakers have little wiggle room. Congress is scheduled for a recess next week, leaving precious few legislative days until Feb. 27, when the US Treasury estimates it will exhaust existing borrowing capacity.