US House defeats Democratic debt bill

WASHINGTON - The Republican-led House of Representatives rejected a proposal Saturday from Democratic Senate Majority Leader Harry Reid to avert a US debt default with ruinous global consequences.

By (AFP)

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Published: Sun 31 Jul 2011, 1:40 AM

Last updated: Mon 6 Apr 2015, 10:24 PM

Lawmakers voted 173-246 to defeat the measure, amid a frantic beat-the-clock effort in Congress to forge a compromise ahead of a midnight Tuesday deadline by which Washington runs out of cash to pay its bills.

The move came a day after the Democratic-held Senate voted 59-41 to set aside Republican House Speaker John Boehner’s bill for raising the $14.3 trillion debt limit, leaving the two chambers at a stalemate with time running short.

Reid and Democratic House Minority Leader Nancy Pelosi will meet at 3:30 pm (1930 GMT) with US President Barack Obama at the White House, according to an Obama aide.

The US economy hit its debt ceiling on May 16 and has used spending and accounting adjustments, as well as higher-than-expected tax receipts, to continue operating normally — but can only do so through Tuesday.

Business and finance leaders have warned that default would send crippling aftershocks through the fragile US economy, still wrestling with stubbornly high unemployment of 9.2 percent in the wake of the 2008 global meltdown.

Absent a deal, the US government will have to cut an estimated 40 cents out of every dollar it spends, forcing grim choices between paying its debt or cutting back on programs like those that help the poor, disabled and elderly.

In a grim warning of what may come if there is no breakthrough by Tuesday, US markets fell for a fifth straight day on Friday — a month of gains wiped out in a week of losses due to poor US growth and the political stalemate.

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