In an unforgiving display of partisanship, the House approved emergency legislation Friday night to avoid an unprecedented government default and the Senate scuttled it less than two hours later.

The final outcome — with the White House and Senate Democrats calling anew for compromise while criticizing Republicans as Tuesday’s deadline drew near — was anything but certain.

“We are almost out of time” for a compromise, warned President Barack Obama as U.S. financial markets trembled at the prospect of economic chaos next week. On Wall Street, the Dow Jones industrial average was down for a sixth straight session.

The House vote was 218-210, almost entirely along party lines, on a Republican-drafted bill to provide a quick $900 billion increase in U.S. borrowing authority — essential to allow the government to continue paying all its bills — along with $917 billion in cuts from federal spending.

It had been rewritten hastily overnight to say that before any additional increase in the debt limit could take place, Congress must approve a balanced budget-amendment to the Constitution and send it to the states for ratification. That marked a concession to tea party-backed conservatives and others in the rank and file who had thwarted House Speaker John Boehner’s attempt to pass the bill Thursday night.

“Today we have a chance to end this debt limit crisis,” Boehner declared, his endgame strategy upended by rebels within his own party.

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But the changes he made to the House GOP bill further alienated Democrats. And they complicated prospects of a compromise that could clear both houses and win Obama’s signature by next Tuesday’s deadline.

At the other end of the Capitol, Senate Democrats scuttled the measure without so much as a debate on its merits. The vote was 59-41, with all Democrats, two independents and six Republicans joining in opposition.

Senate Majority Leader Harry Reid, D-Nev., had an alternative measure to raise the debt limit by $2.4 trillion, enough to meet Obama’s terms that it tide the Treasury over until 2013.

Reid invited Republicans to suggest changes, saying, “This is likely our last chance to save this nation from default.”

The Senate GOP leader, Mitch McConnell of Kentucky, sounded as if he wanted Reid to go first. “I eagerly await the majority leader’s plan for preventing this crisis,” he said in a statement noting the House had now passed two bills to avoid a default and the Senate none.

At the same time Reid appealed for bipartisanship, he and other party leaders accused Boehner of caving in to extremists in the GOP ranks — “the last holdouts of the tea party,” Sen. Richard Durbin of Illinois called them.

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Republicans conceded that the overnight delay had weakened Boehner’s hand in the endgame with Obama and Senate Democrats.

But the Ohio Republican drew applause from his rank and file when he said the House, alone, had advanced legislation to cut deficits, and that he had “stuck his neck out” in recent weeks in hopes of concluding a sweeping deficit reduction deal with Obama.

The White House called the bill a non-starter. Press secretary Jay Carney issued a statement that called it a “political exercise” and said congressional leaders should turn their efforts to a compromise that Obama can sign by Tuesday.

Administration officials say that without legislation in place by Tuesday, the Treasury will no longer be able to pay all its bills. The result could inflict significant damage on the economy, they add, causing interest rates to rise and financial markets to sink.

Executives from the country’s biggest banks met with U.S. Treasury officials to discuss how debt auctions will be handled if Congress fails to raise the borrowing limit before Tuesday’s deadline.

But Carney said the administration did not plan to provide the public with details Friday on how the government will prioritize payments.


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