House Approves Debt Deal; Senate Rejects It

Senate says no less than hours after the House approved emergency legislation.

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The developments occurred one day after Boehner was forced to postpone a vote in the House for fear the earlier version of his measure would suffer a defeat. But by forcing a delay the conservative rebels upended the leadership's strategy of making their bill the only one that could clear Congress before a default and win Obama's reluctant signature.

"Everybody acknowledges that because of the dust-up yesterday we've lost some leverage," said Rep. Steven LaTourette, R-Ohio, an ally of the speaker.

The rebels said they were more worried about stemming the nation's steady rise of red ink.

Rep. Jeff Landry, R-La., a, a first-term lawmaker, issued a statement saying his pressure had paid off.

"The American people have strongly renewed their November calls of bringing fiscal sanity to Washington. I am blessed to be a vehicle driving their wishes to fruition," he said. "This plan is not a Washington deal but a real solution to fundamentally change the way Washington operates."

Administration officials say that without legislation in place by 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 Carney said the administration did not plan to provide the public with details Friday on how the government will 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.

Investors weren't impressed with either the economy or the efforts in Washington.

The Dow Jones industrial average appeared headed for a sixth straight day of losses, and bond yields fell as investors sought safer investments in the event of a default.

At the White House, Obama cited the potential toll on the economy as he urged lawmakers to find a way out of gridlock.

[Markets May Soon Stop Ignoring the Debt Ceiling Fight]

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," he said.

That went to the crux of the conflict — his insistence that Congress raise the government's borrowing authority by enough to avoid a repeat of the current crisis during the heat of the 2012 election campaigns.

Republicans have resisted, accusing him of injecting purely political considerations into the debt limit negotiations.

But Boehner's failure to line up the votes for his legislation Thursday night seemed to embolden Democrats.

Obama asked his 9.4 million followers on Twitter to send tweets to Republican lawmakers.

"The time for putting party first is over. If you want to see a bipartisan (hash)compromise, let Congress know. Call. Email. Tweet," Obama wrote in a tweet, signed "-BO."

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