House Yields to Reagan’s Threat, Hikes Debt Limit : Short-Term Plan Sent to Senate

The House, answering White House threats that the government will stop issuing new checks Friday because of its credit crunch, today passed a short-term hike in the Treasury’s borrowing limit.

The measure goes to the Senate, which earlier today eased a separate pressing problem by giving final congressional approval to a stopgap spending bill that would fund most government agencies until mid-December. Reagan is expected to sign that bill.

Lawmakers were operating under a warning from the White House that the government will “temporarily stop paying its bills” if there is no action by Friday. The Administration also said it would prefer to see long-term solutions.

On a 300-121 vote, the House passed and sent to the Senate legislation increasing the government’s $1.824 trillion in borrowing authority by $80 billion. This would be enough to keep the government solvent through Dec. 13.

Senate action is expected later today or Thursday.

Stalled by Wrangling

Legislation raising the national debt limit to more than $2 trillion has been stalled by wrangling over rival plans passed by the House and Senate to force a balanced federal budget by the end of the decade. Those budget plans have been attached as amendments to the debt-limit legislation.

Congressional bargainers have begun a second round of talks aimed at breaking the impasse, but they have concluded that they will be unable to complete agreement before a Thursday midnight deadline.

Rep. Trent Lott (R-Miss.), the assistant Republican leader in the House, said it is “not only unlikely but probably impossible” that the deadline can be met.

Thus, legislators sought to buy themselves time by passing the interim debt measure.

Earlier, the Senate, by voice vote, approved the spending bill to keep money flowing to most government agencies through Dec. 12.

Only 2 Bills Approved

Action was needed on the measure, approved by the House on Tuesday, because only two of the 13 regular spending bills for fiscal 1986, which began Oct. 1, have been approved by Congress. Without that authority, government offices would have been forced to begin closing at midnight Thursday.

Although Reagan is expected to sign the measure, Administration officials have publicly sidestepped questions about what he will do with a short-term increase in the debt limit.

“The President does not want a short-term extension,” White House spokesman Larry Speakes repeated today. “The President wants a full debt ceiling bill with Gramm-Rudman attached to it.”

“Gramm-Rudman” is the political nickname attached to the Senate-passed version of the balanced-budget plan which was originally co-authored by Sens. Phil Gramm (R-Tex.) and Warren B. Rudman (R-N.H.).

While White House officials publicly insisted that the President wants a long-term debt limit increase along with the balanced budget measure, there were private indications that the President will sign the short-term bill if it appears that House and Senate negotiators are making progress in narrowing their differences on the budget plan.

Speakes, Treasury Secretary James A. Baker III and Budget Director James C. Miller III made an appearance in the White House briefing room today to say that federal agencies will stop issuing new checks starting Friday if Congress has not increased the government’s line of credit.

“The government would continue to function but it would temporarily stop paying its bills,” Speakes said. “We are not going to issue checks that will bounce.”