U.S. Senate agrees to raise U.S. credit limit

By Donna Smith - Sept 27, 2007

With the U.S. government fast approaching its current $8.965 trillion credit limit, the Senate on Thursday gave final congressional approval of an $850 billion increase in U.S. borrowing authority.

The Senate voted 53-42 to raise the debt ceiling to $9.815 trillion, the fifth increase in the U.S. credit limit since President George W. Bush took office in January 2001. The U.S. House of Representatives approved the higher debt limit earlier this year as part of the overall budget resolution and the legislation now goes to Bush for his signature.

"We have no choice but to approve it. If we fail to raise the debt ceiling soon, the U.S. Treasury will default for the first time in its history," said Senate Finance Committee Chairman Max Baucus.

"Plainly, especially in this credit crisis, we cannot let that happen," the Montana Democrat added.

The U.S. Treasury Department has been pressing Congress to pass the debt increase quickly. Last week Treasury Secretary Henry Paulson said the government would hit its current $8.965 trillion debt limit on Oct. 1.

But Sen. Tom Coburn, an Oklahoma Republican, urged lawmakers to reject the debt increase and concentrate on spending cuts instead.

"Families across America don't have the luxury of loaning themselves any money when they've maxed out their credit. But that's what we're going to do," Coburn said.

Lawmakers said the $850 billion increase in borrowing authority, the second largest since Bush took office, should be enough to last the government through next year's congressional and presidential elections.

U.S. debt stood at about $5.6 trillion at the start of Bush's presidency.

"Increasing the debt limit is necessary to preserve the full faith and credit of the United States of America," said Iowa Sen. Charles Grassley, the senior Republican on the Finance panel. (Additional reporting by Richard Cowan)