The House of Representatives Tuesday night defeated a bill to raise the debt limit in a vote staged by Republicans to strengthen their push for deep spending cuts in negotiations with the White House.
Reuters reports the chamber overwhelmingly rejected President Barack Obama's call to increase the $14.3 trillion debt limit without conditions, by a vote of 318-97. Even some Democrats supporting Obama's position voted against it.
"I'm going to advise my members that they not subject themselves to the demagoguery that is sure to follow" if they vote for the measure, chief Democratic vote-counter Rep. Steny Hoyer said before the vote.
According to Reuters, polls show the public does not support a further increase in borrowing authority even as the Treasury Department scrambles to avoid a default that could push the country back into recession and rattle markets across the globe.
The Treasury Department has been tapping alternate funding sources, such as federal employee pensions, to cover its obligations since the debt limit was reached on May 16, but has warned it will run out of options if Congress does not act by August 2.
Reuters notes markets are little concerned by the possibility of default on what is viewed as one of the world's safest investments. Yields on the benchmark 10-year Treasury bond reached a new 2011 low earlier in the day and traders predicted even lower yields later in the week.
Obama will press the case on why the debt limit should be raised when he meets with House Republicans at 10 a.m. on Wednesday, the White House said.
Republicans say they will not back an increase in the country's borrowing authority that does not include deep spending cuts to ensure that debt remains at a manageable level relative to the economy.
"This vote makes clear that deficit reduction will be part of any bill to increase the debt limit," Republican Rep. Dave Camp told Reuters. Camp sponsored the bill even though he does not support it.
Tuesday's vote came after the Senate defeated three separate Republican budget plans in largely symbolic votes last week. The Senate also voted down Obama's budget proposal, which was considered to be irrelevant after he unveiled a more aggressive plan.