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US debt ceiling hike clears House, heads to Senate

WASHINGTON/HONG KONG/TOKYO -- U.S. Republicans capitulated Tuesday to U.S. President Barack Obama's call to extend the nation's borrowing authority with no strings attached, dialing back the threat of an election-year fiscal showdown.

The House of Representatives narrowly approved a measure to suspend the U.S. debt ceiling until March 2015. It now moves to the Senate, which could act on it as early as this week.

A relatively drama-free extension of borrowing authority without other conditions attached would mark a shift away from the confrontations in recent years that brought the world's largest economy to the brink of default and shuttered the U.S. government for 16 days last October.

It could also avoid the turmoil that rocked U.S. and international markets during the previous debt limit fights.

House Speaker John Boehner, unable to gain sufficient support from his fractured party for a plan he unveiled Monday that would have tied the debt limit to a revision of military pension benefits, introduced the debt ceiling bill knowing it would need support from nearly all Democrats in order to pass.

The legislation passed by 221 votes to 201, a clear victory for Obama in the wake of the shutdown that Americans blamed largely on Republicans.

Boehner said it was “a lost opportunity,” telling reporters that the two parties could have “worked together” to find cuts and reforms equal to or greater than the increase in the debt limit.

But Vice President Joe Biden described Boehner's stand-down as “a victory for the country.”

Boehner, the top Republican in Congress, said Obama was clearly “the one driving up the debt,” currently at US$17.3 trillion, and that the president will need to own it as lawmakers gear up for campaign season ahead of November's mid-term elections.

The measure now heads to the Senate. Legislation there can bog down in procedural votes, and a delay would risk the government's ability to pay all of its bills.

Senate Republicans Rand Paul, Lindsey Graham and Roy Blunt said they were “no” votes, but they conceded there was no consensus as to whether to try and block the legislation.

Even if extending the debt limit halts the cycle of political brinkmanship, Blunt was firm on his position that extending borrowing authority should come with deficit-reduction measures.

“Increasing the debt ceiling without changing behavior is not a good idea,” he said.

The White House has insisted for weeks that raising the debt ceiling was non-negotiable, and it did not want to see policy riders attached.

But Boehner stressed that Democratic Minority Leader Nancy Pelosi would need to rally her own troops in order to get borrowing extension authority through the House.

“I made it clear to Miss Pelosi yesterday that if we went this route, I would expect virtually every Democrat to vote for it, and she agreed.”

Global Markets

Global stocks were higher Wednesday after the new head of the U.S. Federal Reserve vowed a continuation of low interest rates. Stronger Chinese trade figures and the shelving of another U.S. debt limit battle also boosted markets.

On Wall Street Tuesday the Dow jumped 1.22 percent, the S&P 500 put on 1.11 percent and the Nasdaq added 1.03 percent.

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