Republican leaders in the US House of Representatives, facing a conservative revolt, have abruptly postponed a vote on legislation to avert a threatened government default and slice federal spending by nearly $US1 trillion ($A911.24 billion).
“The votes obviously were not there,” conceded Representative David Dreier on Thursday night, after Speaker John Boehner and the leadership had spent hours trying to corral the support of rebellious conservatives.
The decision created fresh turmoil as divided government struggled to head off an unprecedented default that would leave the Treasury without the funds needed to pay all its bills.
Administration officials say Tuesday, August 2 is the deadline for Congress to act.
President Barack Obama has threatened to veto the House bill, and the White House taunted Republicans as they struggled.
“Another day wasted while the clock ticks, now is the time to compromise so we can solve this problem and reduce the deficit,” tweeted communications director Dan Pfeiffer.
Senate Democrats stood by to scuttle the bill – if it ever got them – as a way of forcing Republicans to accept changes sought by Obama.
The first sign of trouble for the House’s supporters occurred after hours of routine debate, when the Republican leadership suddenly halted work on the measure.
As the evening slipped by Boehner summoned a string of Republican critics of the bill to his office.
Based on public statements by members of congress, it appeared that five of some two dozen holdouts were from South Carolina.
Others said conservatives wanted additional steps taken to try to ensure that a constitutional balanced-budget amendment would be sent to the states for ratification.
As drafted, the legislation merely requires both houses of Congress to vote on the issue.
Another option under review was to wait for the Democratic-controlled Senate to pass legislation first, a reversal in Republican strategy that would increase Obama’s leverage.
With the bill in limbo, a few first-term conservatives slipped into a small White House chapel as they contemplated one of the most consequential votes of their careers.
Many more congregated in the office of the chief Republican vote counter, Kevin McCarthy, perhaps drawn to the 19 boxes of pizza that were rolled in. Boehner joined them but did not speak to reporters.
Earlier, Boehner had exuded optimism.
“Let’s pass this bill and end the crisis,” said the president’s principal Republican antagonist in a new and contentious era of divided government.
“It raises the debt limit and cuts government spending by a larger amount.”
Wall Street suffered fresh losses as Congress struggled to break its long gridlock. The Dow Jones industrial average was down for a fifth straight session.
The Treasury Department moved ahead with plans to hold its regular weekly auction of three-month and six-month securities on Monday.
Yet officials offered no information on what steps would be taken if Congress failed to raise the nation’s $US14.3 trillion debt limit by the following day.
Administration officials have warned of potentially calamitous effects on the economy if the country defaults on its obligations – a spike in interest rates, a plunge in stock markets and a tightening in the job market in a nation already struggling with unemployment over nine per cent.
White House press secretary Jay Carney outlined White House compromise terms: “significant deficit reduction, a mechanism by which Congress would take on the tough issues of tax reform and entitlement reform and a lifting of the debt ceiling beyond… into 2013.”
The last point loomed as the biggest obstacle.
The House bill cuts spending by $US917 billion over a decade, principally by holding down costs for hundreds of government programs ranging from the Park Service to the Agriculture Department and foreign aid.
It also provides an immediate debt limit increase of $US900 billion, which is less than half of the total needed to meet Obama’s insistence that there be no replay of the current crisis in the heat of the 2012 election campaigns.
An additional $US1.6 trillion in borrowing authority would be conditioned on passage of spending cuts of a greater amount.
The Republican bill’s $US917 billion in upfront spending cuts was trillions less than many tea party-backed rank-and-file Republicans wanted but a total that seemed nearly unimaginable when they took power in the House last winter with an agenda of reining in government.
Numerous Republicans grumbled that the legislation didn’t cut more deeply, and Boehner and the rest of the GOP leadership have spent their week cajoling reluctant conservatives to provide the votes needed to pass it.
While the White House and Democrats objected to the House bill, they readied an alternative that contained similarities.
Drafted by Senate Majority Leader Harry Reid, it provides for $US2.7 trillion in additional borrowing authority for the Treasury. It also calls for cuts of $US2.2 trillion, including about $US1 trillion in Pentagon savings that assume the end of the wars in Iraq and Afghanistan.
Even before the House voted, Reid served notice he would stage a vote to kill the legislation almost instantly.
“No Democrat will vote for a short-term Band-Aid that would put our economy at risk and put the nation back in this untenable situation a few short months from now,” he said.
