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The House of Representatives on Tuesday defeated a bill to raise the US debt limit in a vote staged by Republicans to strengthen their push for deep spending cuts in negotiations with the White House. By a vote of 318-97, the chamber overwhelmingly rejected President Barack Obama's call to increase the $14.3 trillion debt limit without conditions. The rejection even found traction amongst certain Democrats who nominally supported Obama's push. Polls show the public does not support a further increase in borrowing authority even as the Treasury Department scrambles to avoid a default that could drive the country back into recession and rattle markets across the globe. The Treasury Department has been tapping alternate funding sources, such as federal employee pensions, to cover its obligations since the debt limit was reached May 16, but has warned it will run out of options if Congress does not act by August 2. For now, markets are little concerned by the possibility of default on what is viewed as one of the safest investments. Yields on the benchmark 10-year Treasury bond reached a new 2011 low earlier in the day and traders predicted even lower yields later in the week. Reuters |
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