House OKs Debt Cap Hike to $2.3 Trillion

The House Wednesday approved a temporary measure to avoid a government financial crisis by increasing the national debt limit to $2.32 trillion, sending the bill to the Senate, where conservative Republicans are threatening to use it for a showdown over federal budget cuts.

If the limit on how much the government can borrow is not raised by Friday night, the Treasury will run out of credit and will have to begin spending its roughly $47 billion in cash reserves. By May 28, the reserves would be exhausted and the government would be unable to pay its bills.

The fact that raising the debt limit is a “must pass” piece of legislation always makes it a tempting target for lawmakers who would like to attach other pet measures they wish to see passed.

Harm to Bonds Feared

Administration officials Wednesday were lobbying senators to refrain from adding amendments that might delay the bill, fearing that a delay until next week could harm bond markets.

“A lot of people at the White House have talked to me about not bringing up” any amendments when the debt bill reaches the Senate floor today or Friday, Sen. Phil Gramm (R-Tex.) said in an interview Wednesday.

Gramm and his supporters would like to use the measure to put a mandatory enforcement provision back on the Gramm-Rudman budget balancing bill that Gramm co-sponsored in 1985.

“If I’m convinced, I won’t do it,” said Gramm. “I’m not convinced as of now.”

Without action, the debt limit on Friday would be $2.11 trillion, an amount exceeded by current spending.

Auction Could Be Delayed

Although no one expects a stalemate over the debt ceiling to go long enough to seriously threaten the government’s ability to send out Social Security checks and pay other bills, any delay past Friday would force the Treasury to cancel Monday’s regular auction of government securities.

“We’re not sure what the impact would be” of a cancellation, said Treasury spokesman Art Siddon. “We’ve never really faced that before.”

Any Senate amendment would delay passage of the measure until next week. Partly to pressure the Senate not to tamper with the bill, the leadership of the House decided earlier this week to keep their chamber out of session Thursday and Friday. Any Senate amendments, therefore, could not be sent to the House for consideration.

Administration support for the debt limit increase had some effect in the House, where Republicans traditionally vote against debt increases. Seventy-seven Republicans joined most of the chamber’s Democrats in the 296-124 vote on the debt limit. The House, however, rejected by 259 to 162 a larger increase in the debt limit that the Administration also had supported.

“Members (of the House) want a rite of purification,” House Speaker Jim Wright (D-Tex.) said before the vote on the longer extension. “If there’s something they can vote against, it absolves them of sin, and then they can vote for something.”

‘Push Comes to Shove’

Republicans who bucked the Administration’s wishes and voted against the debt bill argued, in the words of California Rep. William E. Dannemeyer (R-Fullerton), that “the only time we get the attention of the spenders” in Congress “is when push comes to shove, at a sensitive time like this when something has to give.”

Supporters of the increase responded, however, that the debt bill does not authorize any new spending, but merely allows the government to pay the bills for money that already has been spent on programs.

The amendment that Gramm would like to add to the debt bill is designed to get around objections the Supreme Court had to the Gramm-Rudman deficit reduction bill. The court ruled last year that the measure’s mechanism for enforcing its schedule of deficit cuts was unconstitutional.