House passes $290 billion boost to debt limit

chart_debt_limit4.top.gifBy Jeanne Sahadi, senior writer


NEW YORK (CNNMoney.com) -- The House on Wednesday narrowly passed a $290 billion increase to the amount of debt the Treasury is allowed to have. Currently, the debt ceiling is set at $12.104 trillion, and if the Senate passes the House-approved increase, it would rise to $12.394 trillion.

The increase would cover Treasury's borrowing needs through Feb. 11, 2010. That is a far cry from the $1.9 trillion increase that lawmakers last week said they wanted to pass.

chart_debt_ceiling.03.gif

The smaller increase in the debt ceiling came about because of pressure brought by a bipartisan group of fiscal hawks in both the House and the Senate, who have threatened to vote against a much-larger debt ceiling increase unless they get various commitments to increase fiscal responsibility in the legislation.

The Democratic leadership would have preferred to pass a large increase to the debt ceiling to carry Treasury through all of next year rather than having to have another vote on the issue before the mid-term elections in November.

But House and Senate leaders can't ignore the fiscal hawks, since they need every vote they can get.

"It's all on the shoulders of leadership. They're responsible for making sure we don't default," said Charles Konigsberg, chief budget counsel of the Concord Coalition, a deficit watchdog group.

As of Tuesday, the amount of debt subject to the limit on Treasury's books was $12.016 trillion. If the debt ceiling isn't increased by the end of this year, the nation could default on its debt. That would unleash a chain of events that could devalue U.S. bonds and seriously harm the nation's reputation with creditors around the world. In short, it's not something lawmakers can afford to let happen.

For the fiscal hawks, agreeing to vote for a short-term increase to the ceiling buys them time to negotiate further with the leadership to address their demands, which differ somewhat in the House and the Senate.

Fiscal conservatives in the House, known as Blue Dogs, have said they would vote against a big increase in the ceiling unless the legislation re-enacts so-called pay-go rules, which require lawmakers to pay for any new spending proposals or tax cuts. But that proposal excludes about $3 trillion worth of policies that are likely to be extended, including the Bush tax cuts for the majority of Americans.

That's why the House version of pay-go may be a no-go in the Senate. Senate Budget Chairman Kent Conrad, D-N.D., has said he supports pay-go but not if it exempts pricey policies.

Meanwhile, a bipartisan group of senators says it won't vote for a large debt ceiling increase unless the leadership commits to a "credible process" for reining in the country's debt.

The senators' proposal, similar to one in the House, is to create a bipartisan fiscal commission charged with making recommendations to Congress for reining in runaway spending growth that threatens to overwhelm the federal budget. Lawmakers would be required to vote up or down on the recommendations but would not be allowed to amend or filibuster them.

Documents obtained by CNN show that top advisers to the president have been privately weighing various versions of a commission, though it would be created by a presidential executive order and thus could not mandate that Congress vote up or down on its recommendations.

Reining in the nation's debt has come to the fore this year, because the economic crisis accelerated the timetable that lawmakers have to deal with long-term fiscal problems, and as lawmakers of both parties consider very expensive proposals going forward.

- CNN's Ed Henry contributed to this report. To top of page

Just the hot list include
Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 32,627.97 -234.33 -0.71%
Nasdaq 13,215.24 99.07 0.76%
S&P 500 3,913.10 -2.36 -0.06%
Treasuries 1.73 0.00 0.12%
Data as of 6:29am ET
Company Price Change % Change
Ford Motor Co 8.29 0.05 0.61%
Advanced Micro Devic... 54.59 0.70 1.30%
Cisco Systems Inc 47.49 -2.44 -4.89%
General Electric Co 13.00 -0.16 -1.22%
Kraft Heinz Co 27.84 -2.20 -7.32%
Data as of 2:44pm ET
Sponsors

Sections

Bankrupt toy retailer tells bankruptcy court it is looking at possibly reviving the Toys 'R' Us and Babies 'R' Us brands. More

Land O'Lakes CEO Beth Ford charts her career path, from her first job to becoming the first openly gay CEO at a Fortune 500 company in an interview with CNN's Boss Files. More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.