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House Passes Increase in Debt Ceiling

Obama and Congress marginally closer to a resolution

En español | Congress took an angry step sideways Friday in the effort to avoid the economic cataclysm of a national default. This sets the stage for a weekend of parliamentary maneuvering that continues to unsettle the rest of the nation, including anxious older Americans.

See also: Will Social Security checks arrive?

Capitol building upside down – Medicare and Medicaid spending along with Social Security checks are threatened in stalled debt talks.

Debt ceiling talks turn the U.S. Capitol upside down. — Photo by: Michael Duva/Getty Images

After a protracted delay for arm-twisting, House Republicans narrowly approved a package cutting future spending by $917 billion and raising the cap on federal borrowing. It also includes a Balanced Budget Amendment. Senate Democratic leaders had said they would table the House bill, scheduling a Sunday vote on their own plan, and within hours of the House vote, the Senate voted, 59 to 41, to reject the measure. That leaves Congress and President Obama marginally closer to resolving the impasse the nation faces Aug. 2 when the nation is prevented from borrowing beyond the legal $14.3 trillion cap.

While neither spending plan touches the national entitlement plans of Medicare, Medicaid and Social Security, failure to pass a plan threatens to delay distribution of the first of $49 billion in Social Security benefits due in August.

The maneuvering Friday followed days of wrangling that peaked Monday evening with dueling national addresses by House Speaker John Boehner and Obama. “The American people may have voted for divided government, but they didn’t vote for a dysfunctional government,” Obama said. But Boehner said overspending and debts have become business as usual: “I’ve got news for Washington — those days are over.”

Q. What’s the difference between the House Republican and the Senate Democratic plans?

A. Neither would include tax increases nor touch the entitlements. The House plan, which passed Friday, 218 to 210, would trim federal spending over the next decade by $917 billion. The measure includes a Balanced Budget Amendment. Finally, it would raise the debt limit by $900 billion and would last the country about six months, when another congressional vote would be needed for another debt ceiling increase.

The Senate plan being developed by Majority Leader Harry Reid, D-Nev., in consultation with Minority Leader Mitch McConnell, R-Ky., and Vice President Joe Biden, would reduce future spending by nearly $2 trillion and would extend until after the 2012 election any need for another congressional vote on the debt limit.

The major differences between the two plans are the timing, and the Senate claims savings from reduced war efforts in Iraq and Afghanistan. AARP Executive Vice President Nancy LeaMond issued a statement endorsing the Senate efforts.

Q. Why can't they just do their jobs and work it out?

A. Boehner and Obama were close to a deal, but it devolved into angry dueling news conferences on Friday night. Obama said he had been “left at the altar” by Republicans. He said any cuts to entitlements like Social Security and Medicare should at least be matched by revenue increases.

Boehner blamed Obama for moving the goal posts by demanding $400 billion more in tax hikes at the last minute. “Dealing with the White House is like dealing with a bowl of Jell-O,” Boehner said.

Q. If the debt ceiling isn't raised, could they really delay sending out Social Security checks?

A. Yes. Past government shutdowns have been over the budget, but mandatory spending like Social Security continued. This time, they are arguing over the government's ability to spend any money at all over the debt limit.

Obama has said that he can't guarantee the government will send out Social Security checks on Aug. 3. With more bills than income, the administration will have to decide which bills to pay — for instance, whether to send out Social Security checks or pay the military, pay bondholders or keep federal facilities like prisons and courts open.

The Bipartisan Policy Center, a think tank, estimates that the government will raise only 56 percent of what it needs to pay its bills next month after Aug. 2. And if it pays bondholders, that leaves enough to pay just half the other bills, said Jay Powell, visiting scholar at the center and author of its July 2011 study "Debt Limit Analysis."

"You've got a lifeboat that fits 50 and you have 100 people," Powell said. "You have to make unthinkable choices."

Next: Social Security, Medicare could be cut. >>

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