U.S. House Passes Spending, Disaster Aid Plan

By Laura Litvan - Sep 22, 2011 10:34 PM PT

The Republican-led House passed a stopgap spending bill containing federal disaster aid two days after rank-and-file party members helped defeat a nearly identical measure, offering no resolution to a fight with Senate Democrats that threatens a government shutdown.

The measure, passed 219-203 early today, would provide $3.65 billion in aid to victims of Hurricane Irene and other natural disasters as part of a measure funding the government until Nov. 18. Democrats who control the Senate say they won’t accept legislation they say doesn’t provide enough for disaster victims and contains offsetting spending cuts they reject.

The House measure “is not an honest effort at compromise” and will be rejected by the Senate, that chamber’s Majority Leader Harry Reid said in a statement late yesterday.

The stopgap measure would implement budget levels agreed to last month in a compromise to raise the debt ceiling. Tea Party- backed lawmakers helped defeat the bill Sept. 21 because they said it spends too much.

The Federal Emergency Management Agency says it needs additional funding to aid victims of Hurricane Irene by Sept. 27. The rest of the government will run out of money Sept. 30 and Congress plans to be out of session next week for Rosh Hashanah, the Jewish new year.

House Majority Leader Eric Cantor, a Virginia Republican, said lawmakers may have to work into this weekend to find an agreement.

Green-Technology Program

Democrats object to a proposed $1.5 billion cut in a green- technology auto-loan program to offset some of the cost of the disaster assistance.

The latest measure is identical to the defeated bill except that it also would rescind $100 million from a program that provided a $535 million federal loan guarantee to Solyndra LLC, which filed for bankruptcy protection this month.

Two days ago, 48 House Republicans unhappy with the measure’s overall cost joined 182 Democrats opposed to the proposed cut in the auto industry-loan program to derail the measure, 230-195. The vote was another setback for Speaker John Boehner, who has faced challenges in managing a large freshmen class of Tea Party-backed Republicans that earlier this year threatened a shutdown and a default on obligations to government bondholders.

In today’s vote shortly after midnight, 213 Republicans and six Democrats supported the slightly revised measure, while 24 Republicans and 179 Democrats opposed it.

‘No Threat’

Boehner of Ohio said at a news conference yesterday there is “no threat” of a government shutdown.

“I have no fear in allowing the House to work its will,” Boehner told reporters. “Does it make my life a little more difficult? Yes it does.”

The speaker “has a true governing problem” on his hands, Sarah Binder, a senior fellow at the Brookings Institution in Washington, said yesterday. “There are two dozen House Republicans who have voted against the April budget deal, the August deficit deal and the continuing resolution.”

Senator Richard Durbin of Illinois, the second-ranking Democratic leader, said, “We’re watching the Tea Party shut- down movie for the third time this year.”

House Minority Leader Nancy Pelosi of California told reporters that Democrats would oppose all efforts to offset disaster aid with other cuts.

Weary Public

The dispute carries political risk for Republicans because polls show the public is weary of the rancor that marked previous battles over the budget. Disapproval ratings for Congress are at historic highs, and Republicans are faring worse than Democrats in polls.

In a Sept. 10-15 CBS News/New York Times poll, 72 percent of adults surveyed disapproved of the job performance of Republicans in Congress and just 19 percent approved. Democrats had a disapproval rating of 63 percent and an approval rating of 28 percent. The poll of 1,452 adults had a margin of error of plus or minus 3 percentage points.

The higher disapproval ratings for Republicans stem largely from perceptions that Boehner and other party leaders are unwilling to compromise with Democrats on key issues, said Michael Dimock, research director of the Pew Research Center.

Market Drop

Stocks tumbled and Treasury 10-year yields dropped to a record amid concern central banks are running out of tools to prevent another recession. The Dow Jones Industrial Average fell 391.01, or 3.5 percent, to 10,733.83. Ten-year Treasury yields fell as low as 1.6961 percent, the lowest since Federal Reserve figures began in 1953.

Republicans said the earlier version of the bill was designed to pass with the support of Democrats, complaining that lawmakers such as Norm Dicks of Washington, the ranking member of the Appropriations Committee, withdrew their backing.

Tennessee Representative Jim Cooper said he and some other Democrats may accept a “less partisan” offset for disaster spending. Republicans “don’t have to poke us in the eye,” he said.

Democrats got a boost from the U.S. Chamber of Commerce, which said in a letter to senators that the auto-loan program “promotes manufacturing in the U.S. and is an important component of America’s energy security.”

Republican leaders were only able to lift the borrowing cap last month with the help of Democrats. The new legislation would set spending levels for the “discretionary” budget for the upcoming fiscal year agreed to as part of the debt limit deal. Democrats say they have no intention of reopening that debate.

Senator Charles Schumer of New York said, “You can’t shake hands on an agreement at the end of July and then they say ‘oh no, it’s up for negotiation again’ in September.”

The measure is H.R. 2608.

To contact the reporters on this story: Laura Litvan in Washington at llitvan@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net