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Sunday 31 August 2014

Boehner backdown avoids debt battle

Published 12/02/2014 | 02:07

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House of Representatives speaker John Boehner relented over the US government's borrowing cap (AP)

Republicans have backed away from a battle over America's debt, allowing President Barack Obama's Democrats to push through a measure to increase the government's borrowing ability to pay its bills and avoid a default before the November election.

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The 221-201 vote came hours after Republican House of Representatives leader John Boehner announced that his fractured party would relent.

Just 28 Republicans voted for the measure, including Mr Boehner, but 193 Democrats more than compensated for the low support among their rivals.

The developments amount to a bitter defeat for the Republicans, who have sought to use must-pass debt ceiling legislation measures as leverage to force spending cuts on Democrats.

Republicans won more than two trillion dollars (£1.2bn) in spending cuts in a 2011 showdown, but gave Mr Obama two debt limit increases last year with only modest legislative add-ons.

Both parties have backed off the bitter fiscal battles that have gripped Washington in recent years before congressional elections. Faced with a tough battle over control of the Senate in particular, neither party wants to shoulder most of the blame for Washington's dysfunction.

The measure now goes to the Democratic-controlled Senate, which is expected to easily approve it later this week.

The White House applauded the latest vote. "Tonight's vote is a positive step in moving away from the political brinkmanship that's a needless drag on our economy," spokesman Jay Carney said.

He said congress should now take additional steps to strengthen the economy and pressed efforts by Mr Obama and Democrats to restore jobless benefits to the long-term unemployed and to increase the minimum wage.

Gene Sperling, director of the White House's National Economic Council, said the administration hoped the development would mean "that the tactic of threatening default or threatening the full faith and credit of the United States for budget debates is over, off the table and never is going to happen again. And if so that would, I think, be a boost for confidence and investment in the US".

The bill would permit the Treasury Department to borrow money to pay the government's bills normally for another 13 months, defusing the chance of a debt crisis well past the November election and providing time for a newly-elected congress to decide how to handle the issue.

"The full faith and credit (of the United States) should be unquestioned and it is not negotiable," said House minority leader Nancy Pelosi, a Democrat.

The vote comes four months after Washington defused a government shutdown and debt crisis that burned Republicans politically - an experience they did not want to repeat.

Mr Boehner made the announcement after conservatives failed to rally around his latest plan, floated on Monday, to tie lifting the debt ceiling to a measure to reverse cuts to military pensions that were enacted less than two months ago. Democrats insisted on a debt measure clean of unrelated legislation.

Earlier plans to tie a debt cap increase to approval of the Keystone XL pipeline or repeal of part of the new health care law failed as well, scuppered by a group of hardline conservatives who vowed never to vote for increasing the government's debt, which stands at more than 17 trillion dollars (£10.3bn).

The measure does not raise the debt limit by a set amount but would suspend it until March 15 2015, to allow the Treasury to borrow the money it needs to pay bills like pension benefits, payments on government debt, and checks for federal workers.

The move reflects a return to the old ways of handling the politically tricky debt ceiling vote in which the president's party is expected to carry most of the load to pass it.

Mr Boehner said his inability to assemble 218 Republican votes - enough to win a floor vote - for any debt limit plan left him no alternative but to turn to Democrats.

"When you don't have 218 votes, you have nothing," he said. "We've seen that before and we see it again."

AP

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