With the clock ticking, U.S. Congress approved a year-long extension of the nation's debt limit on Wednesday, removing the threat of a default until after the 2014 midterm election.
The bill with no policy demands marked a surrender of the congressional Republicans who once vowed to seek concessions in exchange for a debt limit increase, handing victory to U.S. President Barack Obama and Democrats who have refused to bargain over the issue.
The House and the Senate voted on Tuesday and Wednesday respectively to raise the government's borrowing limit until March 2015, allowing the Treasury to borrow as needed to fulfill the payment obligations. The votes were generally carried by Democrats in both chambers.
A suspension of the debt limit enacted by the Congress in October expired on Feb.7. Treasury Secretary Jacob Lew said last week extraordinary measures which can be used to slow the default risk may exhaust on Feb. 27 and the borrowing authority may not go beyond that day.
Without an increase in the statutory borrowing limit, the federal government would face the threat of an historic default that could wreak havoc on global financial markets and hurt economic recovery.
BOEHNER'S CAPITULATION
House Speaker John Boehner stunned House Republicans on Tuesday morning when he dropped a plan which would have tied the debt ceiling increase to a reversal of planned cuts to military pensions approved in December bipartisan budget deal. He floated the proposal Monday night but abandoned it after he realized it won't win enough support.
"We don't have 218 votes, and when you don't have 218 votes, you have nothing," Boehner told reporters at the Capitol Hill.
During past two weeks, the House GOP leaders had struggled to come up with policy provisions to attach to an increase in the nation's borrowing limit. Options vary from Keystone XL pipeline to Obamacare insurance provisions. As all the attempts to pass a bill solely on Republican support failed, Boehner had no choice but to allow a vote on a bill with no conditions attached.
The so called "clean" debt limit bill marked a retreat from a long-held Republican strategy of extracting concessions in exchange for a debt-limit hike, reflecting the lack of consensus and the growing sense of urgency for Republicans pressed by a Feb. 27 deadline.
The showdown which led to a government shutdown last October undercut Republicans position and arguing power. House Republican leaders who had drawn a lesson from the hardening realization, sought to shield themselves from blame for another round of crisis- like fiscal uncertainty.
NEW ERA OF FISCAL TALKS?
In a statement welcoming the vote, Lew said "this week's action combined with the two-year budget agreement and the omnibus spending bill - all of which passed Congress with bipartisan majorities - will provide certainty and stability to businesses and financial markets and should add momentum to the economic growth forecasted in 2014."
Republicans have used the tactic of default threat over the past three years to gain budget concessions. Bitter partisan brinkmanship resulted a deal in 2011 forcing 2.1 trillion dollars spending cuts over a decade. The fight also cost the United States its triple-A credit rating from Standard & Poor's.
This week's actions are relatively calm and less confrontational compared with the past showdowns. Shifting from bold demand of grand bargain on taxes and spendings, Republicans pushed for modest concessions.
Ahead of this year's midterm elections, Republican leaders, who are cautious toward engaging in any fiscal battle which they are not likely to win, turn to pin their hopes on the troubled rollout of Obamacare and the unpopularity of the healthcare law. They would also exploit the underlying weakness in the labor market and the economy to batter the Obama administration and fortify themselves.
Source: Xinhua
