GOP, Democrats claim political victories as Congress finally votes to raise debt limit

Friday, June 28th 2002, 12:00 am
By: News On 6

WASHINGTON (AP) _ Congressional approval of a $450 billion boost in federal borrowing authority spared the government from choosing between defaulting and using ``shaky ... or potentially fraudulent accounting devices,'' Treasury Secretary Paul O'Neill said Friday.

He made the comment to reporters a day after the House gave final congressional approval to increasing the borrowing limit. And it came at a time when repeated disclosures of shady bookkeeping by major companies has transformed corporate behavior into a hot political issue.

O'Neill said the government must avoid even being accused of the ``horrendous accounting policies and practices'' uncovered in corporate America in recent months.

Even so, Senate Majority Leader Tom Daschle, D-S.D., could not resist commenting on O'Neill's remarks when asked about them by reporters.

``Just the sight of the treasury secretary going to jail for using fraudulent devices ... is not something I would wish on any administration,'' he said.

Daschle also chided the Republican-controlled House for not acting until the eve of a deadline the Bush administration had set for boosting the borrowing cap.

``To wait until well past the 11th hour to act and to put the treasury secretary in a position of publicly announcing that he would have even considered potentially fraudulent actions is reprehensible,'' Daschle told reporters. ``It's extraordinarily disconcerting.''

The $450 billion increase will provide enough money for the government to pay its bills until at least December, O'Neill said. That means Congress will not have to face the borrowing question again until after the November elections that will determine which party controls the Senate and House.

Democrats say congressional approval of the increase underlines how the tax cut President Bush engineered last year forced the government back into the red.

Republicans counter that though they didn't like muscling the debt limit increase through the House on Thursday, doing so let them thwart Democrats who had offered to support the effort _ in exchange for higher federal spending.

White House press secretary Ari Fleischer said Bush was eager to sign the legislation. The White House was working with congressional leaders to get the bill on the president's desk Friday, so that he could sign it the same day.

O'Neill derided the notion of having a statutory limit on the government's borrowing authority, calling it an ``anachronism'' that ``we'd be better off without.''

Asked whether he would press Congress to do away with the cap, O'Neill was noncommittal.

The House voted 215-214 to increase the current $5.95 trillion debt ceiling, the first federal borrowing increase Congress has granted in five years.

The Democratic-controlled Senate had approved the measure by a bipartisan 68-29 margin on June 11. Bush is certain to sign it.

Just three Democrats and six Republicans crossed party lines, highlighting the House's partisan rift over the issue.

No one doubted that Congress would eventually raise the debt limit. A federal default is considered unimaginable because it would rattle the bond markets, force interest rates higher, weaken the world economy and deliver a jarring political blow to Bush.

But for months, Republican leaders lacked the votes to push it through the House, where they have a slim majority.

Many GOP lawmakers worried that their opponents in the November's elections would accuse them of forcing federal borrowing to pay for last year's tax cut. Democrats used Thursday's House debate to do just that, ridiculing Bush's fiscal plan and tax cut.

``If we're doing so good, if this plan is working so well, how come we're broke,'' taunted Rep. Marion Berry, D-Ark.

Republicans have blamed the recession and the costs of fighting terrorism for the need to extend the debt limit.

Until Thursday, House GOP leaders said their strategy was to win passage of the debt limit increase by tucking it into a popular counterterrorism package Congress is working on.

But Democrats were intent on forcing a separate vote on the issue.

As House GOP leaders hunted fruitlessly for votes, Democrats offered to supply them. But as a trade-off, they were demanding higher spending on the anti-terrorism bill and in next year's budget, plus overall budget talks that Republicans feared could have resulted in revisiting next year's tax cut.

Republicans decided that by passing the debt limit increase on its own, they would rob Democrats of the ability to demand that swap.