In a move designed to show that the house will not vote to increase the national debt limit without the inclusion of significant budget cuts, the house defeated a measure to raise the national debt level by a vote of 318-97.
The bill sought to raise the federal government's debt limit by about $2.4 trillion. The government has already reached the current limit of $14.3 trillion and Treasury Secretary Tim Geithner has stated that unless lawmakers increase the debt ceiling by August 2, the country could begin default on debt, leading to potentially devastating economic consequences after that.
The result, many experts agree, would be rapidly rising interest rates, a significant decline of the dollar and a higher cost of living.
Congressional Republicans have stated that they will not vote to extend the debt ceiling without being accompanied by significant budget reductions. Many Democrats feel that the debt ceiling issue is of major concern and should be addressed singularly, and separate it from budget negotiations.
Vice President Joe Biden has been leading a bipartisan budget negotiation that is seeking consensus on budget cuts in excess of $1 trillion over the next 10 years. Proposals that are under consideration include changes to entitlement programs such as Medicare and Medicaid, and cuts to discretionary spending.
A group of Republican lawmakers is meeting with President Obama today to further discuss budget reductions that can be agreed upon in conjunction with increasing the debt ceiling.
Although it is unlikely that the debate would be pushed to the point where congress allowed the federal government to default on its debt, the closer the debate gets pushed to the threatened deadline, the more pressure that will placed on an economy that is already suffering through a weakening recovery.