By Alan Fram
Associated Press Writer
Thursday, June 27, 2001; 9:06 p.m.


Republicans barely muscled a $450 billion debt limit increase through Congress on Thursday, finally resolving an issue that had become an increasingly difficult political burden for the GOP.

After weeks of saying they lacked the votes to win, top Republicans spent the day lobbying rank-and-file lawmakers and abruptly brought the bill to the House floor. The measure was approved by a mostly party-line 215-214.

The Democratic-controlled Senate had approved the same increase in the borrowing ceiling on June 11 by a bipartisan 68-29 margin. President Bush is certain to sign it.

"The bipartisan House members who voted for this legislation put politics aside and did the right thing for the country," Treasury Secretary Paul O'Neill, who had spent months urging congressional action, said after the vote. "They stood up for the soundness and strength of the American economy and preserved the full faith and credit of the United States government."

No one doubted that eventually, Congress would raise the current $5.95 trillion debt limit to avert an unprecedented federal default.

But for months, Democrats used the issue as the symbol of what they say are President Bush's failed fiscal policies, particularly the tax cut he pushed through Congress last year. The debt limit was last increased in 1997, before a string of four straight annual surpluses under President Clinton had allowed part of the debt to be paid down.

"Two Republicans, Mr. Reagan and Mr. Bush, they dug the hole," Rep. Jim McDermott, D-Wash., said of the deficits that prevailed before then. "We dug us out of it and now you're back into it. . . . Why don't you admit you made a mess?"

As House GOP leaders spent weeks hunting fruitlessly for votes, Democrats offered to supply them. But as a trade-off, they were demanding higher spending on the anti-terrorism bill and in next year's budget, plus overall budget talks that Republicans feared could have resulted in revisiting next year's tax cut.

Republicans decided that was too a high a price to pay.

GOP leaders said they nailed down the final votes they needed by telling their rank-and-file members that passing the debt limit increase would rob Democrats of leverage for the higher spending they were seeking.

"It was going to be this or have (Senate Majority Leader Tom) Daschle extort $8 billion or so" on the anti-terror bill, said Rep. Jeff Flake, R-Ariz.

The Bush administration first asked Congress for a $750 billion boost in the debt limit last December. The issue had simmered ever since.

Bush and Treasury Secretary Paul O'Neill had urged Congress to boost the debt limit by Friday. After that day, Treasury officials had said, O'Neill would have to resort to extraordinary steps to prevent an unprecedented federal default.

No one believed a federal default would actually occur because of the cataclysmic economic and political consequences that would cause. The government's failure to pay its debts would rattle the bond markets, force interest rates higher, generally weaken the world economy and deliver a jarring political blow to Bush.

But worry over how — and when — the episode would end seemed to be unsettling the financial markets, whose lobbyists were pressuring lawmakers to raise the debt limit.

Underlining the uncertainty, the Treasury Department delayed an announcement Thursday of its weekly auction of three- and six-month bills.

The $450 billion increase would provide enough money for the government to pay its bills until at least December. That means Congress would not have to revisit the always politically painful issue until after this November's elections for control of the Senate and House.

"We realized we had to do it, and right now there's more team unity that we've had in a long time," said Rep. Mark Souder, R-Ind., citing GOP support for trade and prescription drug bills. "We're in full battle gear, fall mode."