The move came as lawmakers grow nervous about 13 trillion

June 10th, 2010|Josh Hudson
Senate

S. debt in the aftermath of a European debt crisis, and record U.S. budget deficits and the debt become major issues ahead of the November congressional elections.

The Senate approved Republican John Cornyns amendment requiring quarterly reports from the president. Republicans, who hope to win control of Congress, accuse President Barack Obama of sinking the nation deeper into debt with wasteful spending.

At the same time, the Senate approved a milder version by Senate Finance Committee Chairman Max Baucus, a Democrat, that would require annual reports from the Treasury Department on the risks posed by foreign government holdings of U.S. debt.

Unlike the Cornyn amendment, the Baucus amendment did not single out China.

Baucus argued that singling out China and other governments could roil financial markets and make countries reluctant to buy U.S. debt.

With America just beginning to recover from the financial crisis, we cannot risk our ability to finance the debt, Baucus said. We cant risk it.

The Senate brushed off those concerns and refused to set aside the Cornyn amendment, agreeing instead to include it and the Baucus amendment in a larger bill aimed at boosting the economy and extending jobless benefits for the long-term unemployed.

Leaders in the Chinese military have threatened retaliation in exchange for the United States selling defensive weapons to the country of Taiwan, Cornyn argued. He added that China was the largest foreign holder of U.S. debt.

The Cornyn amendment would also require the Government Accountability Office to report on the risks of foreign-held U.S. debt and recommend reductions in U.S. spending if it determined that the risk was unsustainable.

The Senate is debating the economic package, which extends some expired business tax breaks and raises taxes on investment fund managers to offset some of the bills 126 billion cost. Democratic leaders are pushing to have the Senate complete work on the bill early next week.

Reporting by Donna Smith Editing by Paul Simao source