Under the newly modified two-step plan outlined by Boehner, a Republican, the Congress would immediately raise the federal government's borrowing capacity by 900 billion U.S. dollars extending to early next year and cut spending by 917 billion dollars over a decade.
According to the legislation rewritten overnight, the second tranche of debt limit increase next year would be contingent on Congress approving a balanced budget amendment to the Constitution and sending it to the states for ratification.
White House spokesman Jay Carney said, To amend the Constitution or default is a "highly dangerous game" to play.The Democrat-controlled Senate scuttled the Boehner bill two hours after the House passage.
The House bill is "flawed", Senate Democratic Leader Harry Reid said, adding that the U.S. economy could not bear the kind of uncertainty any longer.
"The House of Representatives is still trying to pass a bill that a majority of Republicans and Democrats in the Senate have already said they won't vote for," U.S. President Barack Obama said hours before the House voting.
Obama said, Any debt ceiling compromise plan to avert an unprecedented debt default should be bipartisan in order to win support from both Democrats and Republicans.
A lower credit rating would result in a "tax increase" on Americans in the form of higher interest rates on their mortgages, their car loans and their credit card.
It not only achieves more deficit reduction than the bill passed in the House today and puts a process in place to achieve even more savings, it also removes the uncertainty surrounding the risk of default.
According a report, The U.S. economy slowed to an annualized growth rate of 1.3 percent during the second quarter of 2011, far short of market expectations of around 1.7 percent, fresh evidence to a softer economy, the Commerce Department.The weakest since the recession ended two years ago, as flat consumer spending and spending cuts from state and local governments undermined the economic recovery.
Obama urged, "On a day when we've been reminded how fragile the economy already is, this is one burden we can lift ourselves. We can end it with a simple vote, a vote that Democrats and Republicans have been taking for decades, a vote that the leaders in Congress have taken for decades."