WASHINGTON – The House of Representatives voted overwhelmingly Wednesday to suspend the nation’s debt limit until May, allowing the federal government to continue to pay its bills and removing an immediate threat to the economy as it struggles to gain strength.
The move, expected to be ratified by the Senate and signed by President Barack Obama, signaled that the government will not repeat the 2011 debt limit battle this month, a skirmish that frightened Wall Street and led to a downgrading of the nation’s credit rating and could have done so again.
Several economists said Wednesday’s short-term extension will help the U.S. economy, by removing the immediate threat of default and setting the stage for a calmer debate over two other clashes over federal spending – a looming automatic cut in spending called a sequester and the expiration of a continuing resolution that’s financing many government operations.
“It helps because it eliminates the risk that we’d hit the debt ceiling soon,” said Nigel Gault, chief U.S. economist for forecaster IHS Global Insight. “It means we can consider in a less frantic atmosphere the sequester and the CR (continuing resolution).”
But economists stressed that a short-term debt limit extension is only a bandage covering a festering long-term fiscal problem that Congress and the White House need to get a handle on to better instill confidence in the U.S. economy.
Congress still faces deadlines on the automatic spending cuts scheduled to take effect March 1 and must deal with the expiration of the continuing resolution appropriations measure to keep the government operating in March.
With the passage of the so-called “No Budget, No Pay Act” by a 285-144 vote, House Republicans hoped to temporarily side-step a potentially politically damaging fight with the White House over government default.
House Republicans cast the bill as a way to force the Senate to draft a budget for the first time in four years, noting that if either house fails to do so, its members’ pay would be withheld. They called the bill “No Budget, No Pay,’ ” a slogan if not a statement of fact, since lawmakers would be entitled to collect their entire salaries at the end of the Congress with or without a budget in place.
Senate Budget Committee Chairwoman Patty Murray, D-Wash., announced Wednesday that her committee will draft a budget blueprint this year.
Though House Democratic leaders derided the bill as a possibly unconstitutional gimmick, 86 Democrats joined 199 Republicans in voting for the measure. Only 33 Republicans crossed party lines to join 111 Democrats who voted no. Three Democrats didn’t vote.
About an hour before the vote, the Democratic-controlled Senate announced that it would take up the House measure and vote on it as early as next week.
“This bill surrenders the hostage Republicans have taken in the past by decoupling the full faith and credit of the United States from cuts to Social Security and Medicare, or anything else,” Senate Majority Leader Harry Reid, D-Nev., said of the House vote. “In substance, this is a clean debt limit increase that will set the precedent for future debt ceiling extensions.”
Under the House bill, lawmakers agree to suspend the debt limit until mid-May without dollar-for-dollar spending cuts, something that tea party groups, some conservatives and other fiscal hawks were demanding.