government debt ceiling
The debt-ceiling showdown took center stage on Capitol Hill today (Wednesday) as a crucial vote on a Republican bill gave the Treasury the green light to borrow a fresh stash of cash until May 19.
The Republican-controlled House passed the bill by a 284-144 margin.
It now moves on to the Senate, where it is expected to pass quickly without any changes.
Senate Democrats are expected to back the plan even though they have been hesitant to support any short-term debt ceiling fix, maintaining it creates additional uncertainty for businesses and families.
"I'm very glad that (House Republicans) are going to send us a clean debt-ceiling bill," said Senate Majority Leader Harry Reid, D-NV.
The measure would go from the Senate to U.S. President Barack Obama, who has repeatedly said he will not wrangle over the debt ceiling and will sign the bill when it reaches his desk.
Pleased with the results, the White House added a "but," saying it would have liked a longer- term solution.
While the legislation looked extremely likely to make it to the Oval Office, there is still a chance it could get tangled up in Congress, given a controversial provision in the bill.
The legislation includes a divisive rider aimed at coercing Senate Democrats to ink a long-term budget deal. The "no budget- no pay" provision would withhold pay for members of Congress until a sustainable deal is agreed upon.
"It's not a slam dunk. But the main thing is that the Republicans will cave on the debt ceiling. So we're now just arguing over the details," Greg Valliere, chief political strategist for Potomac Research Group, told CNN Money ahead of the voting.
Brace for the Worst as Debt Ceiling Crisis Deadline Nears
If Washington lawmakers don't beat the debt ceiling crisis deadline, we'll see plummeting stocks, soaring interest rates, a slumping dollar and a severe shock to the weak economy.
All of which will hit you in the wallet - and hard.
Most investors are not prepared for the consequences of the failure of U.S. lawmakers to agree on a plan that will raise the federal debt ceiling before the Aug. 2 deadline.
Few believed it even possible, but with only a week to go Congressional leaders and U.S. President Barack Obama are no closer to a deal than they were several months ago.
"We may have a few stressful days coming up - stressful for the markets of the world and the American people," William M. Daley, President Obama's chief of staff, admitted on the CBS program Face the Nation on Sunday.
Until recently, the markets have kept a cool head - most analysts have assumed government officials would reach a compromise in time.
But when negotiations between President Obama and Speaker of the House John Boehner, R-OH, broke down over the weekend, the possibility of a U.S. default suddenly grew frighteningly real.
"There has been this expectation that at some point, they'd come up with a deal, but given the failure this weekend, I think market confidence is eroding," John Canavan, a market analyst at Stone & McCarthy Research, told The New York Times.
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