WASHINGTON -- Senate Democrats on Wednesday proposed allowing the federal government to borrow an additional $1.9 trillion to pay its bills, a record increase that would permit the national debt to reach $14.3 trillion.
The unpopular legislation is needed to allow the federal government to issue bonds to fund programs and prevent a first-time default on obligations. It promises to be a challenging debate for Democrats who, as the party in power, hold the responsibility for passing the legislation.
The record increase in the so-called debt limit is required because the budget deficit has spiraled out of control in the wake of a recession that cut tax revenues, the Wall Street bailout, and increased spending by the Democratic-controlled Congress. Last year's deficit hit a phenomenal $1.4 trillion, and the current year's deficit promises to be as high or higher.
Congress has never failed to increase the borrowing limit, but it will take 60 votes to pass the legislation under an agreement by top Senate leaders.
Getting 60 votes became more complicated after Sen.-elect Scott Brown's victory Tuesday in Massachusetts. Democrats will shortly have 59 Senate seats and will need at least one Republican to pass the legislation.
"We have gone to the restaurant. We have eaten the meal. Now the only question is whether we will pay the check," said Finance Committee Chairman Max Baucus, D-Mont. "We simply must do so."
The White House said the increase "is critically important to make sure that financing of federal government operations can continue without interruption and that the creditworthiness of the United States is not called into question," according to an official policy statement.
Less than a decade ago, $1.9 trillion would have been enough to finance the operations and programs of the federal government for an entire year.
Republican Sen. John Thune of South Dakota immediately offered an amendment to end the bank and Wall Street bailout, officially known as the Troubled Asset Relief Program, or TARP. Thune would prohibit further expenditure TARP funds and would require that all funds paid back be used to retire debt.