Senate Increases Debt Ceiling Temporarily

Senators voted to raise the debt ceiling, but automatic budget cuts still loom unresolved.

Stacks of brand new $100 bills await the printing of their serial numbers at the Bureau of Engraving and Printing in Washington.

The Senate voted Thursday 64 to 34 to raise the nation's debt ceiling, but it came with a catch. The body must pass a budget by April or members won't get a paycheck.

The legislation doesn't increase spending, but instead allows the country to pay the bills it has already accrued.

"No Budget, No Pay," as it has been nicknamed, already cleared the Republican-dominated House of Representatives and the White House has vowed to sign it into law in upcoming days.

The bill will increase the nation's $16.4 trillion debt limit by about $450 billion until May 19. Passing it shows a willingness on behalf of Republicans and Democrats to seek compromise, not confrontation, on issues that could affect the United States's credit rating.

[PHOTOS: The 10 Toughest Politicians]

"The legislation before the Senate sets an important precedent – that the full faith and credit of the United States will no longer be used as a pawn to extract painful cuts to Medicare, Social Security or other initiatives that benefit the middle class," Majority Leader Harry Reid said in a statement about the vote. "A clean debt ceiling increase that allows the United States to meet its existing obligations should be the standard."

Credit agencies had threatened Congress with a downgrade if it did not act.

For years, the debt ceiling was raised without much controversy, but the increase has become a point of contention over the past two years as conservatives see it as bargaining chip to force reductions in government spending.

Since 2001, Congress has voted to increase the debt ceiling 11 times.

And experts say this is not the final showdown, as the increase is only temporary.

[ENJOY: Political Cartoons About Congress]

"On the one hand, it does represent a very welcome acknowledgement by both the House and the Senate on basic responsibilities our representatives have," says Bill Galston, a senior fellow at the Brookings Institution. "But this does not mean that there is a new spirit of compromise in the air."

Congress is slated to hit more important fiscal benchmarks in upcoming months that may prove harder for Republicans and Democrats to navigate.

Republicans must find a rallying point for its often divided caucus to rally around and Democrats must be careful not to come off indifferent to the American public's concern about the debt ceiling, Galston says.

Congress must either face $1.2 trillion in automatic budget cuts or replace them with alternative cuts by the first week of March. And at the end of March, the government runs out of money to keep agencies running.

[RELATED: Breakthroughs and Letdowns in Fiscal Cliff Deal]

When the country faced automatic budget cuts in January, Congress threw together an 11th-hour deal to avoid them, but many Republicans view the so-called sequester, or automatic budget cuts, as the only way to get the White House to slash government spending.

"I think the sequester is going to happen," House Budget Committee Chairman Paul Ryan vowed during an appearance on Meet the Press Sunday. "We think these sequesters will happen because the Democrats have opposed our efforts to replace those cuts with others and they have offered no alternatives."

But there are risks and rewards for lawmakers to consider.

The non-partisan Congressional Budget Office has warned that automatic budget cuts could be damaging to the economy in the short term, although they may have positive long-term effects.

Reid told reporters this week on Capitol Hill that he remains committed to replacing the sequester with new, incremental cuts and tax increases.

"There are many low-hanging pieces of fruit out there that Republicans have said they agreed on previously," Reid said. "There's a lot of things we can do out there, and we are going to make an effort."

More News: