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The GOP-controlled House and the Democratic Senate remain at loggerheads over debt legislation required to avoid a first-ever default on U.S. financial obligations as lawmakers and the White House head into a pressure-packed weekend in search of compromise.
A week of extraordinary partisanship was capped by a power play by Senate Democrats, who killed a House-passed debt limit increase and budget-cutting bill Friday night less than two hours after it squeaked through the House. Senate Majority Leader Harry Reid, D-Nev., set up a test vote for the wee hours of Sunday morning to break a GOP filibuster.
Before then, however, the House was set to even the score by voting Saturday to reject an alternative measure by Reid even before the Senate has taken it up.
Democrats, Republicans and the White House, meanwhile, are expected to be deep in conversation in hopes of a potential compromise. Senate GOP leader Mitch McConnell of Kentucky is likely to play a pivotal role.
The outcome of the weekend endgame was anything but clear as Democrats and Republicans remain at odds over how to force lawmakers to come up with additional budget savings later this year beyond the almost $1 trillion in agency budget cuts over the coming decade that they basically agree on.
After a brutal week on Wall Street - investors lost hundreds of billions of dollars as the markets lost ground every day - pressure is intense to produce an accord before the opening bell on Monday.
"We are almost out of time," President Barack Obama warned on Friday.
The House measure squeaked through on a 218-210 vote, with 22 Republicans joining united Democrats in opposing the GOP measure, which pairs an immediate $900 billion increase in U.S. borrowing authority along with $917 billion in spending cuts spread over the coming decade.
Friday's roll call came after House Speaker John Boehner, R-Ohio, had been forced to call off a vote slated for Thursday in the face of tea party opposition to the measure. He added a provision requiring that a second, up to $1.6 trillion debt increase be conditioned on House and Senate passage of a balanced-budget amendment to the Constitution, which would require an unrealistic two-thirds vote by each chamber to send it to the states for ratification.
Boehner's move only cemented Democratic opposition to the measure and complicated prospects for a weekend compromise that could clear both houses and win Obama's signature by next Tuesday's deadline. And by appeasing the tea party by adding the balanced-budget amendment poison pill, Boehner seemed to hand endgame leverage to Reid and Obama.
Boehner said the House bill - before the addition of the balanced-budget amendment - mirrored an agreement worked out with Reid last weekend.
"Now the bill before us still isn't perfect," Boehner said as he closed debate. "It's imperfect because it reflects an honest and sincere effort to end this crisis by sending a bill over to the Senate that at one time was agreed to by the bipartisan leadership of the United States Senate."
Still, as soon as the measure reached the Senate side of the Capitol, Senate Democrats scuttled the measure without so much as a debate on its merits. The vote was 59-41, with all Democrats, two independents and six Republicans joining in opposition.
Reid alternative measure would raise the debt limit by up to $2.4 trillion, enough to a demand by Obama that the increase be sufficient that Congress doesn't have to wrestle with it again until 2013.
Administration officials say that without legislation in place by the end of Tuesday, the Treasury will no longer be able to pay all its bills. The result could inflict significant damage on the economy, they add, causing interest rates to rise and financial markets to sink.
Executives from the country's biggest banks met with U.S. Treasury officials to discuss how debt auctions will be handled if Congress fails to raise the borrowing limit before Tuesday's deadline.
But White House press secretary Jay Carney said the administration did not plan to provide the public with details Friday on how the government would prioritize payments.
The day's economic news wasn't very upbeat to begin with - an economy that grew at an annual rate of only 1.3 percent in the second quarter of the year.
At the White House, Obama cited the potential toll on the economy as he urged lawmakers to find a way out of gridlock.
He said that for all the partisanship, the two sides were not that far apart. Both agree on initial spending cuts to take effect in exchange for an increase in the debt limit, he said, as well as on a way to consider additional reductions in government benefit programs in the coming months.
"And if we need to put in place some kind of enforcement mechanism to hold us all accountable for making these reforms, I'll support that, too, if it's done in a smart and balanced way," Obama said.
This program aired on July 30, 2011. The audio for this program is not available.
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