Senate Clears $781 Billion Debt Limit Increase

WASHINGTON (AP) – Congress agreed to let the government borrow an additional $781 billion Thursday, allowing lawmakers and President Bush to pay for the war in Iraq without raising taxes or cutting popular domestic programs.The Senate, on a 52-48 vote, sent to President Bush a bill raising the ceiling on the national debt to nearly $9 trillion and preventing a first-ever default on U.S. Treasury notes. When the government reaches the new ceiling, expected sometime next year, the debt will represent $30,000 for every man, woman and child in the United States.The House avoided an election-year vote on raising the debt limit by automatically sending the bill to the Senate when it passed a budget last year.The bill passed the Senate just hours before the House was expected to approve another $91 billion to fund the war in Iraq and provide more aid to hurricane victims.The partisan vote also came as the Senate continued debate on a $2.8 trillion budget blueprint for the upcoming fiscal year, beginning Oct. 1, that would produce a $359 billion deficit.In twin setbacks for GOP leaders, the Senate voted 51-49 to add $3 billion to the budget for heating subsidies for the poor and 73-27 to add $7 billion for education, health and worker safety accounts. The moves broke through President Bush’s overall “cap” on agency budgets to be funded later in the year through appropriations bills.Congress has now increased the debt ceiling four times by a total of $3 trillion since Bush took office five years ago.The Senate vote came a day after Treasury Secretary John Snow warned lawmakers that action was “critical to provide certainty to financial markets that the integrity of the obligations of the United States will not be compromised.”After the vote, Snow applauded Congress for “protecting the full faith and credit of the United States,” saying it ensures that the government “can deliver on promises already made, such as Social Security and Medicare payments and aid for the victims of the 2005 hurricanes.”Treasury had delayed the announcement of next week’s auction of three-month and six-month bills pending Senate action. Shortly after the Senate vote, the department announced that it would auction $20 billion in three-month bills and $17 billion in six-month bills at Monday’s auction.The present limit on the debt is $8.2 trillion. With the budget deficit expected to approach $400 billion for both this year and next, another increase in the debt limit will almost certainly be required next year.The debt limit increase is an unhappy necessity _ the alternative would be a disastrous first-ever default on U.S. obligations _ that greatly overshadowed a mostly symbolic, weeklong debate on the GOP’s budget resolution.Democrats blasted the bill, saying it was needed because of fiscal mismanagement by Bush, who came to office when the government was running record surpluses.“When it comes to deficits, this president owns all the records,” said Minority Leader Harry Reid, D-Nev. “The three largest deficits in our nation’s history have all occurred under this administration’s watch.”Only a handful of Republicans spoke in favor of the measure as a mostly empty Senate chamber conducted a brief debate Wednesday evening.Senate Finance Committee Chairman Charles Grassley, R-Iowa, said Bush’s tax cuts account for just 30 percent of the debt limit increases required during his presidency. Revenue losses from a recession and new spending to combat terrorism and for the war in Iraq are also responsible, he said.As for the $781 billion increase in the debt limit, Grassley said: “It is necessary to preserve the full faith and credit of the federal government.”Before approving the bill, Republicans rejected by a 55-44 vote an amendment by Max Baucus, D-Mont., to mandate a Treasury study on the economic consequences of foreigners holding an increasing portion of the U.S. debt.At present, foreign countries, central banks and other institutions hold more than one-fourth of the debt, but that percentage is growing rapidly.Following the debt limit vote Thursday, the Senate was expected to vote late in the day on the budget plan, a nonbinding measure proposing tax and spending guidelines for the next five years.Sen. Arlen Specter, R-Pa., appears poised to win an increase of $7 billion in new and real funding for education and health research. The $7 billion would effectively be used to break Bush’s $873 billion budget cap for 2007, which represents the most significant vestige of fiscal discipline remaining in Senate Budget Committee Chairman Judd Gregg’s budget.The underlying Senate budget plan is notable chiefly for dropping Bush’s proposed cuts to Medicare and for abandoning his efforts to expand health savings accounts or pass legislation to make permanent his 2001 tax cut bill.Unlike last year, when Congress passed a bill trimming $39 billion from the deficit through curbs to Medicaid, Medicare and student loan subsidies, Senate GOP leaders have abandoned plans to pass another round of cuts to so-called mandatory programs.But Gregg’s measure re-ignites last year’s battle over allowing oil drilling in Alaska’s Arctic National Wildlife Refuge, since it would let Senate leaders bring an ANWR drilling measure to the floor under rules blocking a filibuster by opponents.

Senate Clears $781 Billion Debt Limit Increase

Senate Clears $781 Billion Debt Limit Increase

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