Congress votes against raising debt limit
Wednesday, June 01, 2011 at 7:31 am
The U.S. House Tuesday evening voted 318-97 not to raise the country’s debt limit, setting up a showdown with the White House. Colorado’s delegation split 5-2 on the measure, with only Rep. Ed Perlmutter and Rep. Diana DeGette voting to increase the limit.
The vote was seen as something as a sham as Republicans introduced the bill to raise the limit without cutting any spending as a way to make the point that they would not agree to raise the limit unless deep spending cuts were also part of the plan. The national debt will once again bump up against the limit in August unless the limit is raised by then.
The showdown over the issue is likely to continue well into the summer, with consequences for both parties and, potentially, for the economy and Wall Street, where the bond market in particular is watching the partisan standoff closely. Yet for all the talk of crisis should Congress fail to raise the debt ceiling by Aug. 2, when the Treasury Department says it will run out of room to meet all the government’s obligations without further borrowing, the financial markets are likely to yawn at Tuesday’s proceedings.
“Wall Street is in on the joke,” said R. Bruce Josten, executive vice president of the U.S. Chamber of Commerce.
But beyond this week, Wall Street has reason to be nervous as the issue plays out, said people in both parties and in finance.
Investors have grown accustomed to partisan games of chicken that always end with the needed increase in the government’s borrowing authority. But this showdown, many say, is riskier because of the strongly held antispending, antitax views of the many freshman House Republicans combined with the fragility of the economic recovery.
Perlmutter released this statement:
“Our country has always paid its bills. We need to act responsibly, and stop playing politics with our economic security. We are all in this together, and I know we will responsibly pay our debt and tackle our large deficit by ensuring people can get back to work in our country, protecting Medicare and maintaining the promise we made to our senior citizens.
Unfortunately, House Republicans continue to gamble and play games with our economic security by voting to default on our country’s loans. Defaulting on our loans would result in half a million more Americans losing their jobs. For Coloradans, it would mean higher interest rates on our mortgages, student loans, credit cards, and even higher gas prices.
We know Medicare didn’t cause our debt. Over the past decade Republicans in Congress took a record surplus and turned it into a record deficit by prosecuting two unpaid-for wars, giving trillions in tax giveaways to billionaires and millionaires and let Wall Street gamble with our financial security.”
Polis, who voted with the Republican majority, released this statement:
“Congress must work in a bipartisan, responsible and fair way to reduce the federal deficit and debt while strengthening our economy and creating jobs. House Republicans have instead chosen a partisan path and may endanger our economic recovery with their sham debt limit vote today.
“Addressing the debt limit isn’t about new spending; it’s about paying off a debt largely incurred by Republican policies, such as the Bush tax cuts and the cost of the Iraq and Afghanistan wars. Every responsible economist has made clear that failing to raise the debt limit is irresponsible and risks shattering our fragile economic recovery. I have called for a clean, up-or-down vote on increasing the debt limit, which I support.”
DeGette said this:
“I am deeply disappointed a majority of my colleagues today continued to play political games with something as serious as our nation’s debt obligations. Two off-budget wars and budget-busting tax breaks for the wealthiest Americans have put us in an already precarious fiscal situation, but failing to raise our debt ceiling will cause our nation to default on its bills, halting our nascent economic recovery and ultimately costing this country jobs. I am committed to responsibly reducing our deficit, balancing our budget, and growing our economy, but an ideological effort to rewrite history by failing to pay our bills is irresponsible and will do nothing to help improve our economic outlook.”