Close Close

Financial Planning > College Planning > Student Loan Debt

Boehner Debt Bill Passes House; Obama Urges Bipartisan Deal

Your article was successfully shared with the contacts you provided.

President Barack Obama on Friday urged a bipartisan agreement on raising the debt ceiling, saying that the plan before the House, which later passed Friday night, 218-210, was the uncompromising view of a single faction and “has no chance of becoming law.”

The Senate followed quickly Friday night, voting to reject the House debt-ceiling plan. The Senate voted, 59-41, to table the House plan, which included some Republican votes. Negotiations on a new plan began in earnest.

Obama implored Democrats and Republicans to come up with a plan that he could sign on Tuesday, the deadline for default on U.S. debt. “Raising the debt ceiling simply gives our country the ability to pay bills we already have racked up,” he said. “It gives the United States of America the ability to keep its word.”

In a terse and unscripted five-minute message given before the White House press, Obama said the current House version “would force us to relive this crisis in just a few short months.” He pushed for what he considerd to be more workable plans now on offer by Senate Majority Leader Harry Reid and Senate Republican Leader Mitch McConnell.

The President repeated his administration’s warning that the government would run out of borrowing capacity on Tuesday. The White House has asked for a $2.4 trillion increase above the $14.3 trillion debt ceiling to cover government obligations into 2013.

House Speaker John Boehner managed to round up the necessary votes Friday night after being forced to delay a vote Thursday night on his debt-limit bill because he did not have enough Republican support to pass it.

McConnell, who spoke Thursday on the Senate floor, accused Democrats of refusing to agree to the House bill purely for political reasons.

Saying the House plan is “the only piece of legislation that has any chance of preventing all this from happening,” McConnell asserted that Democratic leaders and the President endorse every feature of the House legislation except the one that would allow Obama to avoid another national debate about spending and debt until after the next presidential election.

“This assurance is the only thing the President and Senate Democrats are holding out for right now,” McConnell said. “The Democrats can try to justify their opposition to the House bill any way they want. They can claim they’re worried about a stalemate six months from now. They can ignore the fact that of the 31 times Congress and the President have raised the debt limit over the past 25 years, 22 of those debt limit increases lasted less than a year. Why? To make the President’s reelection campaign a little bit easier.”

However, Reid has said the House bill will be “dead on arrival” in the Senate because Democrats will not pass it in its current form. Reid is weighing when to introduce his bill to raise the debt ceiling.

Unlike Obama, who refrained from using the term “Tea Party,” Reid has been more outspoken in blaming that political group of freshmen House Republicans for the nation’s debt ceiling woes.

“Five days remain until a few extremist Republicans drive our economy off a cliff because they are too radical and inexperienced to compromise,” Reid said Thursday on the Senate floor. “Financial experts are begging Congress to come to an agreement that averts a first-ever default on this nation’s financial obligations. It won’t be long, they say, before financial markets severely react to continued stubbornness by Tea Party Republicans, tanking our economy.”

In his Friday remarks, Obama warned that if the government failed to reach an agreement by Tuesday, the United States would lose its triple-A credit rating, which would result in an effective tax increase on all Americans in the form of increased borrowing costs on loans, mortgages and credit cards. Without a deal, he added, Social Security payments, government contracts with businesses and veterans benefits were all at risk.

The problem is that the U.S. government “doesn’t have a political system to match our triple-A credit rating,” Obama said. While he is willing to debate budget cuts to avert a U.S. debt default, he said, those cuts should not be tied to raising the debt ceiling.

“There are plenty of ways out of this mess, but we are running out of time,” Obama said, pointing to the Tuesday deadline of Aug. 2, when the United States would experience its first-ever default on the nation’s financial obligations.

Obama repeated his appeal to the American public, first made in his Monday night address to the nation, to keep up the pressure on elected officials—in phone calls and emails and on Twitter—to come to a bipartisan agreement.