WASHINGTON — In an unforgiving display of partisanship, the Republican-controlled House approved emergency legislation Friday night to avoid an unprecedented government default and Senate Democrats scuttled it less than two hours later in hopes of a better deal.
"We are almost out of time" for a compromise, warned President Barack Obama as U.S. financial markets trembled at the prospect of economic chaos next week. The Dow Jones average fell for a sixth straight session.
Lawmakers in both parties said they were determined to avoid a default, yet there was little evidence of progress — or even significant negotiations — on a compromise during a long day of intense political maneuvering.
The House vote was 218-210, almost entirely along party lines, on a Republican-drafted bill to provide a quick $900 billion increase in U.S. borrowing authority — essential to allow the government to continue paying all its bills — along with $917 billion in cuts from federal spending.
It had been rewritten hastily overnight to say that before any additional increase in the debt limit could take place, Congress must approve a balanced-budget amendment to the Constitution and send it to the states for ratification. That marked a concession to tea party-backed conservatives and others in the rank and file who had thwarted House Speaker John Boehner's attempt to pass the bill Thursday night.
"Today we have a chance to end this debt limit crisis," Boehner declared, his endgame strategy upended by rebels within his own party.
But the changes he made to the House GOP bill further alienated Democrats. And they complicated prospects of a compromise that could clear both houses and win Obama's signature by next Tuesday's deadline.
At the other end of the Capitol, Senate Democrats rejected the measure without so much as a debate. The vote was 59-41, with all Democrats, two independents and six Republicans joining in opposition.
Moments later, Senate Majority Leader Harry Reid, D-Nev., unveiled an alternative that would cut spending by $2.4 trillion and raise the debt limit by the same amount, enough to meet Obama's terms that it tide the Treasury over until 2013.
Reid invited Republicans to suggest changes, saying, "This is likely our last chance to save this nation from default."
The Senate GOP leader, Mitch McConnell of Kentucky, accused Democrats of "rounding up 'no' votes to keep this crisis alive," and noted the House had passed two bills to raise the debt limit and the Senate none.
The House, eager to return the Senate's favor rejecting the Boehner bill, set a vote to reject Reid's proposal on Saturday. The Senate set a test vote at about 1 a.m. on Sunday, a middle-of-the-night roll call that underscored the limited time available to lawmakers.
At the same time Reid appealed for bipartisanship, he and other party leaders accused Boehner of caving in to extremists in the GOP ranks — "the last holdouts of the tea party," Sen. Richard Durbin of Illinois called them.
Republicans conceded that the overnight delay had weakened Boehner's hand in the endgame with Obama and Senate Democrats.
But the Ohio Republican drew applause from his rank and file when he said the House, alone, had advanced legislation to cut deficits, and that he had "stuck his neck out" in recent weeks in hopes of concluding a sweeping deficit reduction deal with Obama.
Boehner's measure would provide a quick $900 billion increase in borrowing authority — essential for the U.S. to keep paying all its bills after next Tuesday — and $917 billion in spending cuts. After the bill's latest alteration, any future increases in the debt limit would be contingent on Congress approving the constitutional amendment and sending it to the states for ratification.
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