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House passes deficit-cutting bill

By David Espo

Associated Press

Published: Tuesday, July 19 2011 10:19 p.m. MDT

President Barack Obama discusses the continuing budget talks, Tuesday, July 19, 2011, in the the briefing room of the White House in Washington.

ablo Martinez Monsivais, Associated Press

WASHINGTON — Defying a veto threat, the Republican-controlled House voted Tuesday night to slice federal spending by $6 trillion and require a constitutional balanced budget amendment to be sent to the states in exchange for averting a threatened Aug. 2 government default.

The 234-190 vote marked the power of deeply conservative first-term Republicans, and it stood in contrast to rising support at the White House and in the Senate for a late stab at bipartisanship to solve the nation's looming debt crisis.

President Barack Obama and a startling number of Republican senators lauded a deficit-reduction plan put forward earlier in the day that would include $1 trillion in what sponsors delicately called "additional revenue" and some critics swiftly labeled as higher taxes.

The president said he hoped congressional leaders would "start talking turkey" on a deal to reduce deficits and raise the $14.3 trillion debt limit as soon as Wednesday, using the plan by the so-called Senate Gang of Six as a roadmap.

Wall Street cheered the news of possible compromise as well. The Dow Jones industrials average soared 202 points, the biggest one-day leap this year.

Treasury officials say that without an increase in U.S. borrowing authority by Aug. 2, the government will not be able to pay all its bills, and default could result with severe consequences for the economy.

But a few hours after Obama spoke at the White House, supporters of the newly passed House measure breathed defiance.

"Let me be clear. This is the compromise. This is the best plan out there," said Rep. Jim Jordan, R-Ohio, head of a conservative group inside the House known as the Republican Study Committee.

The legislation, dubbed "Cut, Cap and Balance" by supporters, would make an estimated $111 billion in immediate reductions and ensure that overall spending declined in the future in relation to the overall size of the economy.

It also would require both houses of Congress to approve a balanced budget amendment to the Constitution and send it to the states for ratification.

With a dwindling amount of time remaining, the day's events did little to suggest a harmonious end was in sight to a clash between the parties.

Senate Democrats have announced they will oppose the House passed-measure, although it could take two or three days to complete debate.

Debate in the House was along predictable lines, and only nine Republicans opposed the bill and five Democrats supported it on final passage.

Democrats said the measure, with its combination of cuts and spending limits, would inflict damage on millions who rely on Social Security, Medicare and other programs. "The Republicans are trying to repeal the second half of the 20th century," said Rep. Sander Levin, D-Michigan.

House Speaker John Boehner played a muted role in public during the day. He did not speak on the House floor on the legislation.

In recognition of the political realities, he told reporters that it also was "responsible to look at what Plan B would look like."

He did not discuss what alternatives he had in mind, although the Senate's top two leaders have been at work on one that would let the president raise the debt limit without prior approval by Congress.

The "Gang of Six" briefed other senators on the group's plan after a seemingly quixotic quest that took months, drew disdain at times from the leaders of both parties and appeared near failure more than once.

It calls for deficit cuts of slightly less than $4 trillion over a decade and includes steps to slow the growth of Social Security payments, cut at least $500 billion from Medicare, Medicaid and other health programs and wring billions in savings from programs across the face of government.

It envisions tax changes that would reduce existing breaks for a number of popular items while reducing the top income bracket from the current 35 percent to 29 percent or less.

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