The U.S. House will vote next week on a measure to raise the nation’s $14.3 trillion debt ceiling without spending cuts, a test vote meant by its backers to fail and signal that fiscal changes are needed to win Republican support for raising the borrowing limit.
Democrats earlier asked for approval of a measure that simply increases the debt limit. Laena Fallon, a spokeswoman for House Majority Leader Eric Cantor, said next week’s vote will show “that the Democrats’ demands are way out of touch with the views of most Americans and the markets,” who want the government to “finally begin to live within our means.”
The legislation, introduced today by House Ways and Means Committee Chairman Dave Camp of Michigan, would increase the debt ceiling to $2.4 trillion. That would be enough to get through the end of 2012 under the budget request President Barack Obama presented to Congress in February.
House Minority Whip Steny Hoyer said that bringing up a bill for it to fail would send wrong message and would be irresponsible.
“It will be a message to the financial community, it will be a message to investors and borrowers,” Hoyer told reporters. “We need to pursue a responsible course, not a partisan political course on this issue.”
Congressional leaders and Vice President Joe Biden are meeting again today to continue searching for compromise on a package of spending cuts to accompany a vote later this summer on a debt-limit boost aimed at getting bipartisan support.
White House budget director Jacob Lew said yesterday he was confident congressional Republicans and Democrats will reach a deal with the Obama administration to raise the debt limit, averting a default by an early August deadline.
“I can’t argue that it’ll be pretty,” Lew said of the struggles to achieve a debt accord in a question-and-answer session last night at a meeting of the Economic Club of Washington. “I think there’s a shared understanding that it’s just unthinkable” for the U.S. to default on its debts.
Separately, Senator Dick Durbin, the chamber’s second- ranking Democrat, said a group of five senators that has been working most of this year to forge a debt deal will meet today to discuss a path forward after it lost a sixth member, Oklahoma Republican Tom Coburn, last week.
‘Lot of Support’
“The fact that one senator walked away should not be the end of it,” said Durbin. “There is still a lot of support from members of the Senate for us to continue our work.”
Durbin said he doesn’t expect Coburn will be replaced. He said he plans to make a proposal to the group for continuing the talks, though he didn’t give details.
“We ought to engage more of our colleagues in this conversation,” the Illinois senator said.
Amid debate about debt levels in Washington, bond market yields in the U.S. are lower now than when the government was running a budget surplus a decade ago. Two-year note yields approached the lowest level this year after the government’s $35 billion auction of the securities today drew the highest level of demand since January.
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