The House overwhelmingly refused to raise the nation’s borrowing ability Tuesday — a largely symbolic vote designed to bolster Republican arguments that a successful measure must include deep spending cuts and sweeping policy revisions.
The vote was never intended as a final decision on raising the government’s debt ceiling, but as a step in the political process leading to Aug. 2. That’s when budget officials project they will need to borrow more than the current ceiling of nearly $14.3 trillion.
Failure to increase the borrowing capacity would result in a first-ever federal default, which experts predict would lead to turmoil in financial markets and severe economic consequences.
House leaders took steps to assure Wall Street that Congress does not intend to risk default, reaching out to market leaders before Tuesday’s vote — which was scheduled in the evening, after U.S. financial markets had closed.
“Today, we are making clear that Republicans will not accept an increase in our nation’s debt limit without substantial spending cuts and real budgetary reforms,” said Rep. Dave Camp (R-Mich.), chairman of the House Ways and Means Committee.
Democrats charged that Republicans were playing with fire as they tried to force GOP priorities, including the Republican proposal to revamp Medicare, into the budget talks.
“This is a political stunt,” said Rep. Chris Van Hollen (D-Md.). “This is about threatening to default on the full faith and credit of the United States unless we put in place a Republican budget.”
Congressional leaders and the White House are negotiating behind closed doors, seeking a package of spending cuts and budget policies that would entice Republicans to support a higher debt limit. GOP leaders have said they would not agree without trillions in cuts, and they want changes in programs such as Medicare.
President Obama has invited House Republicans to the White House on Wednesday and Democrats later in the week.
The nation reached its debt limit last month, but the Treasury Department has said it can take extraordinary measures to continue paying obligations through Aug. 2. After that, it risks default.
Tuesday’s proposal would have increased the nation’s borrowing capacity by an additional $2.4 trillion, to $16.7 trillion, to cover the government’s obligations through the 2012 calendar year. It failed on a vote of 318 to 97, with all Republicans voting against it. Democrats split on the question, with 97 in favor and 82 opposed.
The vote provided political cover to Republicans who had campaigned against raising the debt limit.
It also was designed to force onto the record those Democrats who had sought a “clean” debt vote, free from demands for budget cuts and policy changes. Democratic leaders, imagining the television ads that would target lawmakers who voted to increase the debt limit under such circumstances, suggested their members vote with that in mind.
The U.S. Chamber of Commerce has been working with freshmen lawmakers, many backed by the conservative “tea party” movement, to ensure the debt limit is eventually raised.
The debt ceiling has been lifted frequently in recent decades, including under former President George W. Bush, when the borrowing limit nearly doubled, going from $5.9 trillion in 2001 to $11.3 trillion at the end of 2008.