Congress raises debt ceiling to $12.4 trillion

WASHINGTON (AP) - The Senate voted Thursday to raise the ceiling on the government debt to $12.4 trillion, a massive increase over the current limit and a political problem that President Barack Obama has promised to address next year.

The Senate's rare Christmas Eve vote, 60-39, follows House passage last week and raises the debt ceiling by $290 billion. The vote split mainly down party lines, with Democrats voting to raise the limit and Republicans voting against doing so. There was one defection on each side, by senators whose seats will be on the ballot next year: GOP Sen. George Voinovich of Ohio and Democratic Sen. Evan Bayh of Indiana.

"I would not support raising the debt ceiling because Congress has not adopted a credible process to restrain spending and eliminate red ink," Bayh said a statement after the vote.

The bill permits the Treasury Department to issue enough bonds to fund the government's operations and programs until mid-February. The Senate will vote again on the issue Jan. 20.

Obama must sign the measure into law to prevent a market-rattling, first-ever default on U.S. obligations. The government piled up a record $1.4 trillion deficit in 2009 to counter a meltdown in financial markets and help bring the nation out of its worst recession in seven decades.

The early-morning vote followed the Senate's passage of a landmark bill to overhaul the nation's health care system. They were the Senate's last votes of the year.

With the exception of Voinovich, Republicans uniformly derided the bill, though they routinely supplied votes for eight previous increases totaling $5.4 trillion under President George W. Bush.

Voinovich, who is retiring, said he voted "yes" after Majority Leader Harry Reid agreed to consider amendments when the Senate takes up the matter again next month. Bayh told the Senate Budget Committee in November that he would oppose an increase in the limit unless Congress commits to a strict new debt-fighting plan.

Democrats had originally planned to pass an unprecedented increase of almost $2 trillion to avoid another vote before next year's midterm elections.

But that plan fell apart amid opposition from about a dozen Senate Democratic moderates, who refuse to support a debt limit increase unless it is accompanied by legislation to establish a new bipartisan task force to come up with a plan to curb the deficit. That idea is opposed by House Speaker Nancy Pelosi, D-Calif., and other Democratic leaders.

Pelosi, meanwhile, is supporting demands of moderate House Democrats, who are demanding a "pay-as-you-go" budget law aimed at ensuring that new tax cuts or new spending programs don't increase deficits in exchange for their votes for the next debt increase.

The Senate is generally opposed to the idea, even though it was the law of the land for more than a decade.

Battles over those issues and others, such as a vote on a GOP proposal to end the Wall Street bailout program, are expected to resume during January's debate.

Except for Voinovich, Republicans—who helped supply votes to increase the debt ceiling twice last year and provided 27 votes for an $850 billion increase two years ago—opposed the legislation. It is required to issue new debt to pay for federal operations and deposit up to $50 billion into the Social Security trust funds to pay pensions.

Thursday's debt limit measure and the larger version looming in January require a supermajority of 60 votes to pass. Democrats control the chamber with 60 votes, which could require all 60 members of the Democratic caucus to vote for it, including several members who are politically endangered.

The current measure is needed as a result of the out-of-control budget deficit, which registered $1.4 trillion for the budget year that ended in September. The current debt ceiling is $12.1 trillion and is set to be reached by Dec. 31.

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