THIS STORY HAS BEEN FORMATTED FOR EASY PRINTING

In staged vote, House rejects new debt limit

GOP offers plan and calls for its failure

‘This is a political stunt.’ ‘This is a political stunt.’
(Nbc News via Getty Images)
By Jackie Calmes
New York Times / June 1, 2011

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WASHINGTON — The House yesterday overwhelmingly rejected a measure to increase the government’s debt limit, acting on a vote staged by Republican leaders to pressure President Obama to agree to deep spending cuts.

The measure, defeated 318 to 97, was brought up by Republicans to show that there was little House support for raising the $14.3 trillion debt ceiling without concrete steps to rein in chronic budget deficits.

It followed several acts of odd political theater on the House floor: Republicans brought up the measure and then urged its defeat, while Democrats — who not long ago were seeking just such a vote to raise the debt ceiling without attaching spending cuts — assailed Republicans for bringing it up, saying its certain defeat might unnerve the financial markets.

Just in case, Republican leaders scheduled the vote for after the stock market’s close and, in the preceding days, called Wall Street executives to assure them that the vote was just for show, to make the point to Obama that he would have to make concessions in budget negotiations if any debt-limit increase is to pass Congress.

“This vote, based on legislation I’ve introduced, will and must fail,’’ said Representative Dave Camp, Republican of Michigan and chairman of the Ways and Means Committee.

Representative Chris Van Hollen of Maryland, the senior Democrat on the Budget Committee, objected.

“This is a political stunt,’’ he said.

Voting against the measure were 236 Republicans and 82 Democrats. No Republicans voted in favor.

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 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 yesterday’s proceedings.

“Wall Street is in on the joke,’’ said R. Bruce Josten, executive vice president of the US 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, some of whom asked not to be identified given the sensitivity of the issue.

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.

“The people who are more politically savvy realize this may not be the normal brinkmanship,’’ said Senator Mark Warner, Democrat of Virginia.

The chief wild card is the House Republican majority, which was elected in November after a campaign defined by voters’ antipathy toward budget deficits. More numerous than the insurgents elected in the conservative waves of 1980 and 1994, many freshman Republicans have no experience in public office and consider themselves citizen-legislators who entered government to shrink it, regardless of the political costs.

“The people who have been sent to Washington most recently are bringing a strong message from the Republicans more to the right that really want something done about government spending,’’ said Joseph E. Kasputys, founder of IHS Global Insight and an official in the Nixon and Ford administrations.

Many House Republicans have said publicly that they either do not believe the government will default or do not fear it.

Many Republicans have also made comments indicating that they do not understand or do not care that an increase in the debt limit is needed not only for new spending but also to cover Social Security checks, military pay, and myriad other agreed-to purposes.

For Republicans and Democrats to agree this summer on a far-reaching deficit-reduction plan is a hurdle that is all the higher given how far apart the parties are. Republicans oppose any new taxes while Democrats say a balanced package must include higher revenues.