House OKs Bill Raising Debt Limit : Emergency Move Allows Borrowing, Staves Off Default

The House today approved emergency legislation to stave off default by the government, but high-pressure politics will keep the Treasury on a tightrope for weeks to come.

The House, by a vote of 263-155, passed a bill increasing the national debt limit to $2.32 trillion through Aug. 6. The legislation was sent to the Senate, where Majority Leader Robert C. Byrd said action would come quickly.

The emergency bill would allow the Treasury to borrow for the first time since July 17, when an earlier temporary debt limit expired.

Without the new borrowing, the government would be unable to pay its bills by Friday--an unprecedented situation that could permanently damage the nation’s credit standing.

“Default would produce global economic and financial crisis of major proportion,” Treasury Secretary James A. Baker III said in a letter to Congress today.

The short-term debt bill approved by the House would allow the Treasury to resume sales of U.S. savings bonds and to auction government securities to raise money and avoid a default.

Help From Congress

Congress could relieve the crisis for the long term, as the Reagan Administration requested. The House last month approved a new permanent debt ceiling of $2.565 trillion, enough to last through September, 1988.

But Senate advocates of the Gramm-Rudman budget-balancing law are holding that debt legislation hostage to an amendment--still being drafted--that would restore automatic spending cuts to that deficit-reduction plan.

Extending the debt ceiling for just a week would allow Senate Democrats and Republicans to resolve their bickering over how that amendment should work.

If the Senate agrees on a Gramm-Rudman change, it would then send it into negotiations with the House as Congress tries to leave for its August recess.

Reagan earlier this year promised to support strengthening Gramm-Rudman as part of the debt bill, but he is now asking for “clean” legislation, devoid of amendments.