House approves debt bill; senate rejects it

WASHINGTON (AP) — In an unforgiving display of partisanship, the Republican-controlled House approved emergency legislation Friday night to avoid an unprecedented government default and Senate Democrats scuttled it less than two hours later in hopes of a better deal.

"We are almost out of time" for a compromise, warned President Barack Obama as U.S. financial markets trembled at the prospect of economic chaos next week. The Dow Jones average fell for a sixth straight session.

Lawmakers in both parties said they were determined to avoid a default, yet there was little evidence of progress — or even significant negotiations — on a compromise during a long day of intense political maneuvering.

The House vote was 218-210, almost entirely along party lines, on a Republican-drafted bill to provide a quick $900 billion increase in U.S. borrowing authority — essential to allow the government to continue paying all its bills — along with $917 billion in cuts from federal spending.

It had been rewritten hastily overnight to say that before any additional increase in the debt limit could take place, Congress must approve a balanced-budget amendment to the Constitution and send it to the states for ratification. 

That marked a concession to tea party-backed conservatives and others in the rank and file who had thwarted House Speaker John Boehner's attempt to pass the bill Thursday night.

"Today we have a chance to end this debt limit crisis," Boehner declared, his endgame strategy upended by rebels within his own party.

But the changes he made to the House GOP bill further alienated Democrats. And they complicated prospects of a compromise that could clear both houses and win Obama's signature by next Tuesday's deadline.

At the other end of the Capitol, Senate Democrats rejected the measure without so much as a debate. The vote was 59-41, with all Democrats, two independents and six Republicans joining in opposition.