The Senate voted Thursday to allow the national debt to swell to nearly $9 trillion, preventing a first-ever default on U.S. Treasury notes.
The bill passed by a 52-48 vote. The increase to $9 trillion represents about $30,000 for every man, woman and child in the United States. The bill now goes to President Bush for his signature.
The measure allows the government to pay for the war in Iraq and finance Medicare and other big federal programs without raising taxes. It passed hours before the House was expected to approve another $91 billion to fund the war in Iraq and provide more aid to hurricane victims.
The partisan vote also came as the Senate continued debate on a $2.8 trillion budget blueprint for the upcoming fiscal year that would produce a $359 billion deficit for the fiscal year beginning Oct. 1.
The debt limit will increase by $781 billion. It's the fourth such move _ increasing the debt limit by a total of $3 trillion _ since Bush took office five years ago.
The vote came a day after Treasury Secretary John Snow warned lawmakers that action was "critical to provide certainty to financial markets that the integrity of the obligations of the United States will not be compromised."
On Thursday, Treasury postponed next week's auction of three-month and six-month bills pending Senate action, though the move was likely to be quickly reversed given the Senate's vote.
The present limit on the debt is $8.2 trillion. With the budget deficit expected to approach $400 billion for both this year and next, another increase in the debt limit will almost certainly be required next year.
The debt limit increase is an unhappy necessity _ the alternative would be a disastrous first-ever default on U.S. obligations _ that greatly overshadowed a mostly symbolic, weeklong debate on the GOP's budget resolution.
Democrats blasted the bill, saying it was needed because of fiscal mismanagement by Bush, who came to office when the government was running record surpluses.
"When it comes to deficits, this president owns all the records," said Minority Leader Harry Reid, D-Nev. "The three largest deficits in our nation's history have all occurred under this administration's watch."
Only a handful of Republicans spoke in favor of the measure as a mostly empty Senate chamber conducted a brief debate Wednesday evening.
Senate Finance Committee Chairman Charles Grassley, R-Iowa, said Bush's tax cuts account for just 30 percent of the debt limit increases required during his presidency. Revenue losses from a recession and new spending to combat terrorism and for the war in Iraq are also responsible, he said.
As for the $781 billion increase in the debt limit, Grassley said: "It is necessary to preserve the full faith and credit of the federal government."
Before approving the bill, Republicans rejected by a 55-44 vote an amendment by Max Baucus, D-Mont., to mandate a Treasury study on the economic consequences of foreigners holding an increasing portion of the U.S. debt.
At present, foreign countries, central banks and other institutions hold more than one-fourth of the debt, but that percentage is growing rapidly. |
