US Debt Crisis: US House Passes Debt Ceiling Bill [Video]

After months of partisan impasse, the House on Monday approved a budget agreement intended to head off a potential government default, pushing Congress a big step closer to the conclusion of a bitter fight that has left both parties bruised and exhausted.

The House of Representatives approved legislation to raise the U.S. debt limit by at least $2.1 trillion and cut federal spending by $2.4 trillion or more, one day before a threatened default.

The House voted 269-161 for the plan negotiated by leaders and President Barack Obama over the weekend as angry Democrats turned their fire on Obama accusing him of a capitulation to Republicans.

House Democrats were evenly split on the legislation – 95 for and 95 against – while 174 Republicans voted for the measure and 66 opposed it. The measure goes to the Senate for a final vote planned tomorrow.

As the House of Representatives passed a last minute bill to raise the US borrowing limit while cutting spending by $2.4 trillion, Left-wingers felt betrayed by the White House, saying the price paid to win Republican support had been much too high.

“We’re coming up to a deadline we all must recognize: default,” said Representative Paul Ryan, a Wisconsin Republican and chairman of the Budget Committee. “Both parties got us in this mess; both parties are going to have to work together to get us out.”

The legislation is due to be approved by the Senate on Tuesday, just hours before the US was due default on its obligations for the first time in its history.

“It’s hard to believe we are putting our best foot forward with the legislation that comes before us today,” said House Democratic leader Nancy Pelosi of California.

“Not one red cent” will come from the wealthiest Americans to cut the deficit, she said. Still, she said she supports the plan because it ends economic uncertainty and prevents cuts in Social Security and Medicare.

Representative Emanuel Cleaver, a Missouri Democrat, said: “This deal is a sugar-coated Satan sandwich. If you lift the bun, you will not like what you see.”

Representative Gabrielle Giffords, the Arizona Democrat wounded in a shooting attack, drew a long standing ovation as she arrived to vote for the measure, making her first appearance on the House floor since the Jan. 8 assault in Tucson.

The agreement reached by the White House and party leaders in the House and Senate during tense talks over the weekend will allow Mr Obama to borrow the same amount, $2.4 trillion, to allow the government to meet its debt obligations into 2013.

But it came with considerable strings attached to cut the ballooning $14.3 trillion national debt. About $1 trillion will be cut immediately from government spending, with a further $1.4 trillion to be agreed by the end of the year.

Liberals who once lionized Mr Obama were enraged that the White House failed to twist Republicans’ arms in Congress and include revenue increases in the deal, through closing tax loopholes for oil companies and removing various tax deductions that benefit the wealthy.

The savings are made up entirely of spending cuts, though conservatives have had to swallow unwanted savings on the military. The left-leaning grassroots organisation MoveOn described the deal as “grotesquely immoral”.

“Our members are wondering, ‘What in God’s name is going on in D.C.?'” said Justin Ruben, executive director of the group, which claims five million members. “The country needs jobs, and Washington is debating what vital programme needs to be cut.”” Michael Tomasky, a leading liberal commentator, wrote: “This is the lowest moment of Obama’s presidency.”

While George W Bush wrecked the country “through rank incompetence”, Mr Obama “is simply handing the Republicans the keys to the house and saying ‘take what you want’,” he said in the Daily Beast.

Robert Borosage, co-director of the Campaign for American Future, a liberal think tank, accused Mr Obama of yielding to “the Tea Party terrorists – the extremist faction willing to hold the economy hostage to get their way”.

The cuts would not improve the slow recovery, which would in turn affect Mr Obama’s prospects of a second term, he claimed.

Figures revealed yesterday showed that US manufacturing grew at its slowest pace in two years in July as new orders contracted.

“I think he is in increasing danger. The whole argument against him that he has been there four years and there are no jobs, that he has failed, will be an increasingly strong argument,” said Mr Borosage.

Without a major push to create jobs, the alliance of young voters, African Americans , Latinos and single women that elected Mr Obama in 2008 may well not turn out to vote next time, he added.

The White House defended the deal, saying it was “not the case that Democrats “got nothing”. “We think the president’s leadership has been essential to this process,” said Jay Carney, the White House press secretary. [via The Telegraph (UK), CNN and BBC]

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