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Ill-fated GOP debt plan passes in House vote

WASHINGTON - The Republican-controlled House of Representatives passed legislation to cut federal spending by $6 trillion and require congressional approval of a constitutional balanced budget amendment in exchange for raising the federal debt ceiling and averting a threatened government default.

As CBSNews.com's Lucy Madison reports, however, it was largely a symbolic vote in the House, as the bill would require approval from two-thirds of both the Senate and the House of Representatives. In the Democrat-dominated Senate, achieving that support is likely impossible.

President Obama has also vowed to veto it should it ever reach his desk.

CBSNews.com special report: America's debt battle

The 234-190 vote Tuesday night, largely along party lines, marked the power of deeply conservative first-term Republicans, and stood in contrast to stirrings at the White House and in the Senate on a renewed effort at bipartisanship to solve the looming debt crisis.

Obama clearly overshadowed the House vote when he said in the White House press room earlier Tuesday that a unexpectedly rejuvenated bipartisan Senate plan — that cuts spending and raises taxes — is "broadly consistent" with his ideas for slashing the budget deficit. He held out hope it would be an opening for Congress to raise the debt ceiling.

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The plan by the Senate's so-called bipartisan Gang of Six is far too complicated and contentious to advance before an Aug. 2 deadline to avoid a default that Treasury Secretary Timothy Geithner and other experts warn would rattle markets, drive up interest rates and threaten to take the country back into a recession. But its authors clearly hope that it could serve as a template for a "grand bargain" later in the year that could erase perhaps $4 trillion from the deficit over the coming decade.

Wall Street cheered the news of possible compromise. The Dow Jones industrial average soared 202 points, the biggest one-day leap this year.

Unless Congress agrees to increase the federal borrowing limit beyond the current cap of $14.3 trillion, the administration will be unable to pay all the government's bills. That would leave the Obama administration with the hard choices of whether to make payments to holders of Treasury bonds or send out checks to retirees relying on Social Security, the government-run pension plan.

The outcome of Tuesday's House vote was never in doubt. Debate in the House was along predictable lines, and only nine Republicans opposed the bill and five Democrats supported it on final passage.

"Our bloated and obese federal budget needs a healthy and balanced diet. ...," said Republican Rep. Reid Ribble, one of 87 first-term House Republicans supported by the tea party movement that is determined to reduce the size of government.

Democrats said the measure, with its combination of cuts and spending limits, would inflict damage on millions who rely on the government's social safety net. "The Republicans are trying to repeal the second half of the 20th century," said Democratic Rep. Sander Levin.

Still, the vote might clear the way for enough House Republicans to support bipartisan plans under consideration in the Senate as an alternative means to raise the debt ceiling and avert an unprecedented U.S. default.

The vote gives Republican lawmakers from conservative districts some political cover to allow the debt limit to increase. It allows them to show their ideological purity by going on record as supporting sweeping spending cuts and the balanced budget amendment.

The alternative Senate plan, a measure the Gang of Six senators said they were near agreement on, would seek an immediate $500 billion "down payment" on cutting the deficit as the starting point toward deficit cuts of slightly less than $4 trillion over the coming decade. That action would be finalized in a second piece of legislation.

The Gang of Six — three senators from each party — briefed other senators on the group's plan after a seemingly quixotic quest that took months, drew disdain at times from the leaders of both parties and appeared near failure more than once.

The plan as described Tuesday was almost certain to upset the core constituencies of both parties.

Liberal Democrats oppose efforts to make major cuts in cherished social programs. But the plan includes steps to slow the growth of Social Security payments and cut at least $500 billion from Medicare and Medicaid, the federal programs that subsidize health care for the elderly and poor.

The plan would also raise revenues by about $1 trillion over 10 years through a major overhaul of the tax code, challenging Republican Party orthodoxy that has held sway for two decades that insists that candidates pledge not to raise any taxes.

There was no assurance such a plan would win support in the House where nearly all Republicans remain steadfast in their opposition to including any tax increases in a deficit-reduction plan. But in the Senate at least three more Republicans signed on as supporters of the Gang of Six.

"We have an opportunity to act like statesmen and avoid a debacle on Aug. 2, and it seems to me that all of our efforts should be focused on that," said Republican Sen. Roger Wicker of Mississippi. He and others said the plan was well-received at a weekly closed-door meeting of Republican senators.

Obama stopped well short of endorsing the Gang of Six plan, saying administration officials were analyzing it and not all details were known.

But he said it included "a revenue component" along with savings in Medicare and Social Security, making it the sort of balanced approach he has long advocated. He called the plan "a very significant step" that "is broadly consistent with what I've proposed."

Obama also noted that Senate Majority Leader Harry Reid and Republican leader Mitch McConnell have been cooperating on a fallback plan that would allow the president to raise the debt limit by as much as $2.5 million without a prior vote of Congress while also setting up a special committee to recommend cuts from federal programs, including Social Security and Medicare.

"That continues to be a necessary approach to put forward. In the event that we don't get an agreement, at minimum, we've got to raise the debt ceiling," Obama said. But he added, "we continue to believe we can achieve more."

While the Reid-McConnell backup measure faces furious opposition among many conservatives, it nonetheless has been seen as probably the most viable option for raising the debt ceiling by Aug. 2 and averting a catastrophic default. It calls for modest spending cuts and no tax increases.