Senate paves way for final debt increase

Senate Minority Leader Mitch McConnell, Kentucky Republican, talks Jan. 24, 2012, to reporters on Capitol Hill following the Republicans’ weekly strategy session. (Associated Press)

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• Business_Finance
• Politics
• Barack Obama
• Congress
• Senate

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The debt fight that dominated Congress last year whimpered to a close Thursday as the Senate voted to clear the way for President Obama to raise the federal government’s borrowing limit by another $1.2 trillion to $16.4 trillion, which he hopes will last past the November election.

In a 52-44 vote, the Senate blocked a bill that would have halted the debt increase. Under the terms of the deal Mr. Obama and House Speaker John A. Boehner struck last summer to couple spending cuts with more debt, the debt limit has risen $2.1 trillion - the largest increase in history.

But the spending cuts have been slower to materialize. Only $38 billion has been cut in discretionary spending, or less than 2 percent of the new borrowing authority the government has been granted.

Democrats, who provided the votes to power through the debt limit increase, said it doesn’t actually increase spending. Instead it allows the government to borrow money to cover the costs Congress and the president have incurred in other bills.

“There wouldn’t be a SEAL Team 6, let alone all of our other troops would not be paid,” said Sen. Max Baucus, Montana Democrat. “Social Security benefits would not be paid. Just think of that. Medicare bills not paid. Think of that. These programs would all be in danger if we were to default.”

Republicans, who mostly opposed the increase, said the vote showed Congress still hasn’t gotten a grasp on out-of-control spending.

“We should be working together to lower the debt, not having votes to increase it,” said Senate Minority Leader Mitch McConnell, Kentucky Republican.

Mr. McConnell was the architect of the process that played out Thursday.

Under terms of August’s deal, Mr. Obama is able to raise the debt limit by a set amount unless Congress passes a resolution blocking him from doing it. Thursday’s failed vote was on such a resolution.

Even if the resolution had passed, Mr. Obama could have vetoed it, and it would have taken a two-thirds majority to override it and finally block the debt increase.

Mr. Obama will now have authority to borrow up to nearly $16.4 trillion, which the White House hopes will last through November’s election.

That August debt deal established the supercommittee, which was tasked with producing $1.2 trillion in spending cuts to offset the $1.2 trillion in new debt authority Mr. Obama is now being granted. But the committee deadlocked.

One Republican, Sen. Scott P. Brown of Massachusetts, joined 51 members of the Democratic caucus in backing the higher debt authority, while two Democrats joined the rest of the GOP.

Sen. Joe Manchin III of West Virginia was one of those Democrats, and he said he was shocked that neither side has taken serious action since the supercommittee’s failure.

“My vote today is a message to the leaders in Congress and the president that they must act now,” he said.

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