Republican bill passes, opening path to US debt deal

WASHINGTON, (Reuters) – The U.S. House approved a  Republican deficit plan today that has no chance of  becoming law but could pave the way for a last-ditch bid for  bipartisan compromise to avert a crippling national default.
With time running short ahead of a Tuesday deadline to  raise the debt ceiling, the Republican-controlled House pushed  the deficit-cutting plan through by a vote of 218-to-210 after  the party’s leaders reworked the bill to appease anti-tax  conservatives in their ranks.
The legislation, denounced earlier by President Barack  Obama who had admonished lawmakers to stop wasting time and  find a way “out of this mess,” was doomed to defeat in the  Democratic-led Senate where all of Obama’s Democrats have vowed  to vote against it later today.
But the House vote broke weeks of political inertia and  opened the door to talks on a compromise that could pass  Congress before Tuesday. That is the deadline to lift the $14.3  trillion U.S. debt limit or else render the world’s largest  economy unable to pay all of its bills.
Delays and procedural hurdles will now make it all but  impossible for Congress to strike a deal and send it to Obama’s  desk until the 11th hour, injecting a dangerous level of  uncertainty into already rattled global financial markets. A  late deal also raises the prospect of the United States losing  its top-notch AAA credit rating.
Both sides have been at impasse for weeks with lawmakers  locked in a blame game that has brought the country to the  brink of an unprecedented default, which could plunge America  back into recession and trigger economic turmoil globally.
World leaders have been stunned by the dysfunction in  Washington. World Bank President Robert Zoellick today said  the United States was playing with fire.