The House of Representatives has voted to allow the
government to go $US1.9 ($NZ2.7) trillion deeper in debt - an
increase of about $US6000 more for every US resident that
provided a vivid election-year reminder of the country's
perilous financial condition.
The huge debt increase, approved 217-212, is only enough to
keep the government afloat for about another year as it
borrows more than 40 cents of every dollar it spends on
programmes like defence, health care, feeding the poor and
protecting the environment, much of it from China and other
Asian nations.
The budget tops $3.7 trillion this year and the deficit's
approaching $1.6 trillion under the budget submitted by
President Barack Obama this week.
The huge increase - to $14.3 trillion - in the cap on federal
borrowing was designed by Democratic leaders to ensure that
the rank and file will not have to vote again to run up
another increase before facing voters increasingly angry over
government spending and debt in the November elections.
Already, the accumulated debt amounts to roughly $40,000 per
person.
"This debt is being piled on the backs of our kids and
grandkids with no relief in sight," House Minority Leader
John Boehner, a Republican, said.
Economists warn that the rapidly-rising debt could force
interest rates higher and, if left unchecked, could have even
worse consequences for the economy.
Passage of the Bill sends it to Obama, who will sign it to
avoid a first-ever, market-rattling default on US
obligations.
"I can't think of a more reckless or irresponsible act.
Defaulting is not an option," said Rep. Jim McGovern, a
Democrat. "If the United States defaults, investors will lose
confidence that the US will honour its debts in the future."
Thirty-seven Democrats, mostly from Republican-leaning
districts, voted against the measure. So did every
Republican, even though they routinely supported prior
increases in the borrowing cap when their party controlled
Congress or when Republican George W. Bush was president.
Senate approval last week on a party-line tally was only
possible because Massachusetts Republican Scott Brown had yet
to assume office.
Brown was being seated today. To help win passage, Democrats
also adopted - in a 233-187 vote - budget rules designed to
curb a spiraling upward annual deficit, projected by Obama to
hit a record $1.56 trillion for the budget year ending
September 30.
The new rules would require future spending increases or tax
cuts to be paid for with either cuts to other programmes or
equivalent tax increases.
If the rules are broken, the White House budget office would
force automatic cuts to programmes like Medicare, farm
subsidies and unemployment insurance.
Current rules lack such teeth and commonly have been waived
over the past few years at a cost of about $1 trillion. Most
other benefit programmes - including health care for the
poor, government pensions and food stamps - would be exempt
from such cuts, leading Republicans to charge that the new
rules are just as weak.
