J. Scott Applewhite, Associated Press
WASHINGTON — The endgame at hand, House Republicans lined up Thursday to pass legislation to prevent looming government default while slicing nearly $1 trillion from federal spending. Senate Democrats pledged to scuttle the bill swiftly in hopes of forcing a final compromise.
"Let's pass this bill and end the crisis," said House Speaker John Boehner, the president's principal Republican antagonist in a new and contentious era of divided government. "It raises the debt limit and cuts government spending by a larger amount."
President Barack Obama has threatened to veto the measure, and in debate on the House floor, Rep. Debbie Wasserman Schultz of Florida savaged it as a "Republican plan for default." She said the GOP hoped to "hold our economy hostage while forcing an ideological agenda" on the country.
Despite the sharp rhetoric, there were signs that gridlock might be giving way.
"Around here you've got to have deadlock before you have breakthrough," said Sen. Kent Conrad, D-N.D. "We're at that stage now."
Wall Street suffered fresh losses as Congress struggled to break its long gridlock. The Dow Jones industrial average was down for a fifth straight session.
The Treasury Department moved ahead with plans to hold its regular weekly auction of three-month and six-month securities on Monday. Yet officials offered no information on what steps would be taken if Congress failed to raise the nation's $14.3 trillion debt limit by the following day.
Without signed legislation by Aug. 2, the Treasury will not have enough funds to pay all the nation's bills. Administration officials have warned of potentially calamitous effects on the economy if that happens — a spike in interest rates, a plunge in stock markets and a tightening in the job market in a nation already struggling with unemployment over 9 percent.
White House press secretary Jay Carney outlined White House compromise terms: "significant deficit reduction, a mechanism by which Congress would take on the tough issues of tax reform and entitlement reform and a lifting of the debt ceiling beyond ... into 2013."
The last point loomed as the biggest obstacle.
The House bill cuts spending by $917 billion over a decade, principally by holding down costs for hundreds of government programs ranging from the Park Service to the Agriculture Department and foreign aid.
It also provides an immediate debt limit increase of $900 billion, which is less than half of the total needed to meet Obama's insistence that there be no replay of the current crisis in the heat of the 2012 election campaigns.
An additional $1.6 trillion in borrowing authority would be conditioned on passage of at least $1.8 trillion in further savings to be recommended by a newly created committee of lawmakers. Those deficit reductions would presumably come from cuts to benefit programs such as Social Security and Medicare, as well as an overhaul of the tax code generating additional government revenue.
The GOP bill's $917 billion in upfront spending cuts was trillions less than many tea party-backed rank-and-file Republican lawmakers wanted, but a total that seemed nearly unimaginable when they took power in the House last winter with an agenda of reining in government. Numerous Republicans grumbled that the legislation didn't cut more deeply, and Boehner and the rest of the GOP leadership have spent their week cajoling reluctant conservatives to provide the votes needed to pass it.
By most accounts, they were succeeding.
"It gives us a little bit of heartburn because it doesn't go big enough," said Rep. Sean Duffy, R-Wis., a first-term lawmaker who said he would vote for the bill as the best one available.
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