Congress passes bill that raises debt limit

In the run-up to the final vote, a proposal by Republican Sen. Rob Portman of Ohio to require dollar-for-dollar spending cuts on any future debt limit increases was cast aside, 54-44.

"America must pay its bills — no one is arguing against that point," Portman said in a statement issued after the bill's passage. "What we are debating is how to shrink those bills moving forward so the federal government doesn't continue maxing out its credit card and selling out future generations."

Also blocked was an attempt by the Ohio Republican, who served as budget director under President George W. Bush, to guarantee that the government stay open — at reduced spending levels — even if funding expires in the future. The vote was 52-46.

Sen. Pat Toomey of Pennsylvania authored a proposal to give priority to payment of principal and interest on the debt, Social Security benefits and military pay in the event the debt limit is reached in the future. It failed on a wider, bipartisan vote of 79-19.

Treasury Department officials said that as soon as Obama signs the debt limit legislation, Treasury will begin taking steps to reverse the measures it has been taking over the past month to avoid exceeding the current debt limit, which was reached on Dec. 31.

Treasury has the ability to create about $200 billion in headroom primarily by tapping funds from government employee pension funds. Treasury said it will restore the money that was diverted with interest once the debt legislation is signed. That will allow the same measures to be used once again if needed when the current debt authority runs out on May 18.