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House to vote on debt limit proposal as negotiations continue

John Holman of Denver, Colo., right, and others with the group No Labels, rally on Capitol Hill to urge Congress and the president to find a bipartisan solution.

Associated Press

John Holman of Denver, Colo., right, and others with the group No Labels, rally on Capitol Hill to urge Congress and the president to find a bipartisan solution.

WASHINGTON — The House is preparing to vote today on a Republican proposal to raise the U.S. debt ceiling in exchange for steep spending cuts, in defiance of President Barack Obama's vow to veto the bill if it were to pass both chambers of Congress.

The standoff underscored the largely symbolic nature of the Republican measure while private negotiations continue to avert a federal default.

The talks behind the scenes revolved around a Senate-led plan to let Obama increase the debt ceiling on his own through 2012. The plan also would include as much as $1.5 trillion in budget cuts identified by Republican and Democratic negotiators after weeks of discussions.

Senate leaders said Monday that the chamber would stay in session through the coming weekend. Without an increase in the debt ceiling by Aug. 2, Treasury officials have said the U.S. could default, with financial upheaval rippling worldwide.

The House vote today centers on a GOP plan known as "cut, cap and balance" legislation. The proposal would cut spending by $111 billion in 2012 and cap future outlays to 19.9 percent of the nation's gross domestic output — a lower level of government spending not seen in 70 years.

It also would require that Congress send a balanced-budget amendment to the Constitution to the states for ratification, which is a lengthy process.

The proposal is expected to pass the House, but not the Senate. Even House endorsement of the package Tuesday would not ensure that the proposed amendment could win the two-thirds approval in each chamber required passage.

Still, the vote carries political value by giving voice to a conservative majority that has so far refused to compromise with the White House on raising the debt ceiling.

The White House attacked the Republican "cut, cap and balance" plan, portraying it as a "radical" response to the deficit problem that would dismantle Medicare and other aspects of the federal safety net.

Both House Speaker John Boehner, R-Ohio, and House Majority Leader Eric Cantor of Virginia reacted relatively mildly to the White House veto threat.

"As President Obama has not put forth a plan that can garner 218 votes in the House, I'd caution him against so hastily dismissing 'Cut, Cap and Balance,' " said Cantor.

Private negotiations are expected to continue. Boehner and Cantor had an unannounced meeting with Obama Sunday at the White House.

The $1.5 trillion in cuts in the still-forming Senate plan are likely to include reductions in agricultural subsidies and federal pensions, and would bring in new revenue from broadcast spectrum leases.

It also would set up a committee of lawmakers to recommend future cuts for an up-or-down vote in Congress by year's end.

To attract Democratic votes, the package may include a proposal to swap the extension of an expiring break on payroll taxes for workers for the closing of tax loopholes for corporate jet owners and others.

Information from the Associated Press was used in this report.

The debt clock ticks

Monday's developments: President Barack Obama says the two sides are "making progress" in negotiations. Senate Majority Leader Harry Reid, D-Nev., says the Senate will meet each day until the issue is resolved.

What's next: The Republican-led House will vote today on a bill to cut and cap spending and require that Congress pass a balanced budget amendment before the debt ceiling can be raised. While the bill is unlikely to pass the Democratic Senate, Obama threatens to veto it.

U.S. debt still attractive: China, the biggest buyer of U.S. Treasury debt, increased its holdings in May for the second straight month, after five months of declines. China's holdings increased to $1.16 trillion. Japan and the United Kingdom also boosted stockpiles.

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House to vote on debt limit proposal as negotiations continue 07/18/11 [Last modified: Monday, July 18, 2011 11:03pm]
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