Bush Tells Congress of Urgency to Pass Hike in Debt Limit

WASHINGTON -- President Bush, struggling to break a fiscal logjam, urged Democratic and Republican leaders Tuesday to put aside political posturing and pass a crucial bill to increase the legal limit for the federal debt.

Bush’s letter is the latest, most pointed warning from the administration that if the debt-limit increase is not approved by the end of the week, the government risks an unprecedented default on payments to holders of government bonds.

But the debt-limit bill is caught in a morass of partisan squabbles that are symptomatic of a broader disarray in Congress on fiscal matters this year. Appropriation bills are moving slowly because Congress, for only the second time in decades, could not agree on an overall government spending target. Long-standing tools for enforcing budget limits are about to lapse. And lawmakers have taken months to pass an “emergency” spending bill for anti-terrorism initiatives that enjoy broad bipartisan support.

The most pressing issue is Bush’s seven-month-old request for an increase in the $5.95-trillion limit on government’s borrowing authority to accommodate the growing budget deficit. In a letter he sent Tuesday to House Speaker J. Dennis Hastert (R-Ill.) and House Minority Leader Richard A. Gephardt (D-Mo.), Bush urged them to give bipartisan approval to the debt hike--just as the Senate managed to do two weeks ago.

“I am writing to ask that the bipartisan cooperation you have shown in our war against terror and creation of a new Department of Homeland Security be extended to another important priority: Maintaining the full faith and credit of the United States Government,” Bush said.

But economic issues have always been harder for the two parties to cooperate on. Even after last year’s recession was worsened by the Sept. 11 terrorist attacks, a bitterly divided Congress took months to craft an economic aid package.

The debt issue is particularly thorny for House GOP conservatives, who pride themselves on running the government with a keen eye on the bottom line. They fear political fallout from their constituents if they vote for a debt-limit increase.

Given the likelihood of conservative defections on the issue, House Republican leaders claim they could not pass a debt-limit increase on an up-or-down vote unless Democrats lend some support.

But House Democrats are adamant that Republicans take responsibility--and the political heat--for raising the debt limit because it is needed, in part, to pay for the tax cut the Bush administration pushed through Congress last year. They are forcing the confrontation to underscore a key Democratic campaign theme: That the tax cut has left the federal budget a shambles.

So with Democrats unwilling to help, Republicans have tried instead to slip a debt-limit hike into the anti-terrorism emergency spending bill. That way, conservatives could avoid a vote solely on the debt issue. But the spending bill is stalled, in part because Democrats want to thwart the GOP strategy.

In the absence of congressional action, Treasury Secretary Paul H. O’Neill has resorted to a number of accounting gimmicks, such as borrowing from government retirement funds, to avoid bumping up against the debt limit. But he now says that he has run out of tricks and that Congress must act before Friday, when the government must certify a round of Social Security checks and other big payments.

House Majority Leader Dick Armey (R-Texas) on Tuesday suggested that Congress might leave for a weeklong Independence Day recess without breaking the impasse. He said lawmakers may face enough criticism for inaction when they go home that they would return more willing to vote for the hike.