WASHINGTON, (Reuters) – The U.S. Congress and world markets faced more uncertainty yesterday as Republican leaders delayed action on a plan to raise the government’s $14.3 trillion borrowing limit, narrowing the chances for a deal to avert a debt default.
A week before an Aug. 2 deadline for Congress to act, lawmakers have held out hope for a compromise even as rival Republican and Democratic proposals have paralyzed Washington and prompted growing nervousness over the risks of a downgrade to the top-notch U.S. credit rating.
But serious discussions looked to be delayed for several days after Republicans pushed back a House of Representatives vote on their plan originally expected for today.
Staffers scrambled to rewrite the bill after an analysis by non-partisan budget experts found it would not deliver the level of spending cuts it promised.
The vote will now be delayed until Thursday at the earliest, meaning Congress will almost certainly be negotiating right up until the Aug. 2 deadline when the Treasury Department has said it will run out of borrowing room.
Analysts say the government may have enough cash on hand to pay its bills until the middle of the month.
House Speaker John Boehner, the top Republican in Congress, also faces an insurrection against his plan from Republican lawmakers aligned with the conservative Tea Party movement.
While most expect a last-minute accord to avert the first default by the United States, the bitter partisan squabbling and absence of a political consensus on long-term deficit reduction has increased the likelihood of an unprecedented downgrade in the gold-plated U.S. credit rating.