US Congress votes to lift debt ceiling for three months
US Republicans have approved a measure to avert a showdown with President Obama and another fiscal crisis next month, giving the US another three months of borrowing to pay its debts.
The House of Representatives, which is controlled by Republicans, passed legislation to suspend the US borrowing limit for three months and dropped its immediate demand for spending cuts in equal measure.
The legislation was passed by 285 votes to 144 against, temporarily removing the so-called debt ceiling set by law and enabling the government to continue to borrow to meet its obligations until May 18th.
The measure removes a potential government default, which would have devastating consequences for the US economy, and allows the government to borrow through the $16.4 trillion (€12 billion) debt ceiling. It also extends the Republican fight with Democrats over a reduction in the size and scale of government spending to reduce the country’s deficit.
The legislation avoids another crisis next month when the US Treasury has said that measures put in place to extend borrowing will run out. This follows a deal to raise taxes on the richest Americans last month to prevent the US falling over the fiscal cliff at the end of last year when spending cuts and much broader tax increases were due to kick in.
Congress, however, faces further deadlines in March when large automatic spending cuts come into effect at the start of the month and an appropriation measure keeping the government up and running expires on March 27th.
A group of 33 Republicans in Congress voted against the legislation saying that they would surrender their leverage over the Democrats to force through deep government spending cuts. Some Democrats also opposed the legislation; 111 voted against the legislation, saying that the short-term measure would not remove the uncertainty around the flagging US economy.
They also objected to conditions, introduced at the insistence of the Republicans, tied to the legislation, saying that the government should be allowed to borrow to pay debts already incurred.
Republicans imposed a requirement that both the Senate and House must adopt a new budget by April 15th or else have their congressional pay withheld until the next Congress in 2015.
“All we’re saying is: ‘Congress, follow the law, do your work, budget,’” said Republican Congressman Paul Ryan of Wisconsin, setting out the reasons for the condition.
“We owe our constituents more than that. We owe them solutions. And when both parties put their solutions on the table, then we can have a good debate about how we fix the problem.”