The US House of Representatives
Source: Press TV
The US House of Representatives has rejected Democratic Senate Majority Leader Harry Reid's plan to avert a US default on its debt by a vote of 246-173.
The vote was held on Saturday, one day after the Democratic-controlled Senate rejected House Speaker John Boehner's plan, AFP reported.
Boehner's plan would impose $1.2 trillion in spending cuts, and establish a select congressional commission to propose an additional $1.8 trillion in savings by Thanksgiving, November 24, 2011. The plan aims for about $3 trillion in spending cuts over 10 years.
Reid's proposal, on the other hand, would cut $2.7 trillion in spending, using budgeting gimmicks that include about $1 trillion in savings from winding down the wars in Iraq and Afghanistan. It would not increase taxes and the debt ceiling hike would be extended.
The US debt ceiling is currently capped at $14.3 trillion, up from $10.6 trillion when President Barack Obama took office in 2009, and the administration says that if it is not elevated by August 2, the government will default on its obligations.
Obama says that with Boehner's short-term plan, the country would face the same crisis after five to six months, but Reid's long-term plan can save the US from defaulting on its debt at least until 2013.
Obama told Republicans and Democrats to reach a compromise, saying that “failing to come to an agreement would be inexcusable.”