Yahoo Finance US Debt Ceiling: House Passes Suspension
The US House of Representatives has approved legislation that temporarily suspends the requirement for Congress to approve the nation's debt ceiling.
Republicans voted to approve the nearly four-month suspension on limiting America's borrowing, backing away from an immediate battle with President Barack Obama and a possible first-ever default on the country's obligations.
Until changing course, Republicans had been threatening to demand dollar-for-dollar spending cuts to match the increase in the nation's borrowing limit.
At issue is the US debt - nearly $16.5trn and rising fast. That is the cumulative amount the country owes as a result of routinely spending more than it collects in taxes.
The law requires that Congress approve raising the amount the government can borrow to pay its obligations - such as payments to contractors, unemployment benefits and interest payments to US bondholders - as the debt exceeds the previous limit.
The legislation was also designed to prod Senate Democrats to pass a budget for the first time in almost four years, calling for a withholding of lawmakers' pay in either the House or Senate if their chamber fails to pass a congressional budget resolution by April (Paris: FR0004037125 - news) 15.
The House passed the measure by a 285-144 vote - a bipartisan showing on an initiative brought by majority Republicans.
Democratic Senate Majority Leader Harry Reid said the chamber would approve the action as well and send it quickly to Mr Obama for his signature.
The Office of Management and Budget previously said the Obama administration would not oppose the short-term solution.
With the debt ceiling issue back front and centre in the partisan fight in Washington, Democrats criticise Republicans for using it as a tool to push their attempts to cut social programmes and require a fight over the debt every few months.
Republicans had been threatening to use Congressional power over the federal budget to exact spending cuts from the Obama administration and Democrats that would equal the increase in the so-called debt ceiling.
Republican budget cutters have long targeted the social safety net programmes: Medicare health insurance for Americans 65 and older, Medicaid insurance payments that cover the poor, and Social Security, the federal pension for Americans of retirement age.
But the Republican leadership in the House decided to step back from an immediate confrontation by suspending the required approval of raising the debt limit until May 18, apparently deciding that Mr Obama held the upper hand over congressional Republicans following his easy re-election to a second term in November (Xetra: A0Z24E - news) .
The legislation does not set a specific debt limit. It would automatically increase the limit by the amount required to fund US government obligations through that date.
Even before his inauguration earlier this week, the president rejected Republican threats not to approve raising the borrowing limit, saying he would not allow the opposition to "hold hostage" the "full faith and credit" of the United States.
While he then voiced opposition to repeatedly having to deal with the issue, he apparently set that aside as the Republicans decided to suspend action for four months.
In his inaugural address on Monday, Obama was formidable in re-emphasising his support for the key social programmes that conservative Republicans want to cut dramatically.
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