Delay in debt plan vote stokes U.S. uncertainty

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.

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