House backs $290 billion debt limit increase

WASHINGTON (Reuters) - The House of Representatives on Wednesday narrowly voted to raise the nation's debt limit by $290 billion, enough to cover the government's financing needs for another two months.

The House voted 218 to 214 to raise the debt limit to $12.394 trillion. The Senate is expected to vote on the measure before the Treasury Department reaches its current debt limit of $12.1 trillion as forecast by the end of the month.

Democratic leaders in the House struggled to round up the 218 votes needed for passage amid increasing public concern about budget deficits. No Republicans voted for it, and 39 Democrats voted against it.

House Majority Leader Steny Hoyer said Congress had no choice but to raise the limit to avoid a catastrophic default that would rattle financial markets.

"It is not about pointing fingers, it is about taking responsibility," Hoyer said.

But there was plenty of finger-pointing on the House floor as Democrats and Republicans blamed each other for the country's soaring debt, which has more than doubled since 2001 thanks to wars in Afghanistan and Iraq, a deep recession, and tax cuts.

The U.S. public debt stood at $12.079 trillion as of Tuesday, the Treasury Department said.

'GET THE MESSAGE'

"When will it stop? When will Washington get the message that we can't borrow and spend and bail our way back to a growing America," said Representative Mike Pence, the No. 3 Republican in the House.

The government posted a record $1.4 trillion deficit in the fiscal year ended September 30, and the deficit is expected to exceed $1 trillion again this year.

Budget experts warn that the government will need to take steps in the coming year to get its debt under control or face possible panic in financial markets.

A looming wave of retirements is expected to make the situation worse over the coming decade, as costs for retirement and healthcare programs rise.

Democratic leaders had hoped to raise the limit by at least $1.8 trillion rather than $290 billion. The larger increase would have covered the expected debt increase through 2010 and avoided another uncomfortable vote before next November's congressional elections.

But centrist Democrats from both chambers said they would not vote for the larger limit increase without measures aimed at getting the budget under control. The short-term increase gives them a chance to resolve their differences.

Fiscal hawks in the Senate want to set up a commission that would consider spending cuts, tax hikes and other painful measures. Congress would be forced to reject or accept the commission's proposal, but could not ignore it or amend it.

Centrist House Democrats would like to strengthen rules requiring lawmakers to find ways to pay for much new spending.

"We don't have the will here in the Congress to discipline ourselves," said Democratic Representative Allen Boyd.