Senate OKs debt ceiling hike to $14.3T

Senate Democrats passed a $1.9 trillion increase in the federal debt limit Thursday, seeking to push off another politically painful debt vote until after the midterm elections.

All 60 Democrats and no Republicans voted for the debt limit increase. The measure, which the House has yet to vote on, would put the debt ceiling at roughly $14.3 trillion.

Sen. Paul Kirk (D-Mass.) voted for the debt increase. Sen.-elect Scott Brown (R-Mass.), his replacement, has not been seated.

{mosads}Democrats said the move is necessary because the debt is approaching its current ceiling of $12.4 trillion. If the debt breaches the limit, the government would lose its borrowing authority and risk default.

“We have gone to the restaurant, we have eaten the meal; now the only question is whether we pay the check,” said Sen. Max Baucus (D-Mont.) in urging his colleagues to increase the limit.

Republicans criticized Democrats for passing a massive increase, arguing that a smaller increase would have been more responsible.

“It’s like the drunken sailor asking to have the bar open all night,” said Sen. Judd Gregg (R-N.H.).

If the House agrees to the $1.9 trillion debt ceiling hike, lawmakers won’t have to make another debt vote until 2011.

Democrats won enough votes for passage only after the White House, Senate centrists and House Democratic leaders reached a deal on measures to tackle the rise in red ink.

A group of centrist Senate Democrats, led by Sens. Evan Bayh (Ind.) and Kent Conrad (N.D.), said that their votes depended on lawmakers committing to a special legislative process to come up with a package of fiscal reforms. President Barack Obama fulfilled that requirement in his State of the Union when he announced that he would create by executive order a fiscal reform commission.

Bayh, who opposed a short-term debt limit increase last month, praised the president for backing measures such as the fiscal commission and a three-year freeze on non-security discretionary spending to address the deficit, which hit a record $1.4 trillion last year and is expected to surpass $1 trillion in 2010.

“We can’t allow the country to default on its debt. That would cause an economic calamity,” Bayh said. “But we also need fiscal discipline, so I think [Obama has] struck a balance here that will enable us to do both.”

House Speaker Nancy Pelosi (D-Calif.) had opposed the commission approach, fearing it would put the power over entitlements, taxes and spending in the hands of an appointed body. But she relented after Senate Democrats agreed to pass a pay-as-you-go measure that requires any new mandatory spending be offset by new taxes or spending cuts elsewhere.

The Senate passed the pay-go measure as an amendment to the debt limit increase Thursday. The pay-go amendment also passed on a party-line vote, 60-40.

The Senate pay-go legislation would not apply to costly items that are expiring that Democrats plan to extend — a host of middle-class tax cuts, Medicare doctor payments, current estate and gift tax rates and a patch to keep the Alternative Minimum Tax from hitting middle-income Americans. The exemptions, except the one for the middle-class tax cuts, would end in five years or less, meaning that lawmakers would have to pay for them eventually.

Conrad had opposed a version of the pay-go measure passed by the House because all of the exemptions would have been permanent.

But Gregg argued that the limits on exemptions did not go far enough, making a floor motion to call the Senate legislation “Swiss-cheese-go.”

The debt limit debate revealed bipartisan support for discretionary spending limits, suggesting that Obama’s call for a freeze on non-security discretionary spending has a chance of passing the upper chamber. An amendment offered by Sens. Jeff Sessions (R-Ala.) and Claire McCaskill (D-Mo.) sought to cap yearly discretionary spending increases to about 2 percent for the next five years. The amendment didn’t get the 60 votes it needed to be adopted, but most of the Senate — 16 Democrats, 39 Republicans and an independent — voted for it.