The measure allows the government to pay for the war in Iraq and finance Medicare and other big federal programs without raising taxes. It passed hours before the House was expected to approve another $91 billion to fund the war in Iraq and provide more aid to hurricane victims.

The partisan vote also came as the Senate continued debate on a $2.8 trillion budget blueprint for the upcoming fiscal year that would produce a $359 billion deficit for the fiscal year beginning October 1.

The debt limit will increase by $781 billion. It's the fourth such move -- increasing the debt limit by a total of $3 trillion -- since Bush took office five years ago.

The vote came a day after Treasury Secretary John Snow warned lawmakers that action was "critical to provide certainty to financial markets that the integrity of the obligations of the United States will not be compromised."

On Thursday, Treasury postponed next week's auction of three-month and six-month bills pending Senate action, though the move was likely to be quickly reversed given the Senate's vote.

The present limit on the debt is $8.2 trillion. With the budget deficit expected to approach $400 billion for both this year and next, another increase in the debt limit will almost certainly be required next year.

The debt limit increase is an unhappy necessity -- the alternative would be a disastrous first-ever default on U.S. obligations -- that greatly overshadowed a mostly symbolic,
weeklong debate on the GOP's budget resolution.

Democrats blast Bush

Democrats blasted the bill, saying it was needed because of fiscal mismanagement by Bush, who came to office when the government was running record surpluses.

"When it comes to deficits, this president owns all the records," said Minority Leader Harry Reid, D-Nevada. "The three largest deficits in our nation's history have all occurred under this administration's watch."

Only a handful of Republicans spoke in favor of the measure as a mostly empty Senate chamber conducted a brief debate Wednesday evening.

Senate Finance Committee Chairman Charles Grassley, R-Iowa, said Bush's tax cuts account for just 30 percent of the debt limit increases required during his presidency. Revenue losses from a recession and new spending to combat terrorism and for the war in Iraq are also responsible, he said.

As for the $781 billion increase in the debt limit, Grassley said: "It is necessary to preserve the full faith and credit of the federal government."

Before approving the bill, Republicans rejected by a 55-44 vote an amendment by Max Baucus, D-Montana, to mandate a Treasury study on the economic consequences of foreigners holding an increasing portion of the U.S. debt.

At present, foreign countries, central banks and other institutions hold more than one-fourth of the debt, but that percentage is growing rapidly.

Following the debt limit vote Thursday, the Senate was expected to vote late in the day on the budget plan, a nonbinding measure proposing tax and spending guidelines for the next five years.

Specter seeks spending increases

Sen. Arlen Specter, R-Pennsylvania, appears poised to win an increase of $7 billion in new and real funding for education and health research. The $7 billion would effectively be used to break Bush's $873 billion budget cap for 2007, which represents the most significant vestige of fiscal discipline remaining in Senate Budget Committee Chairman Judd Gregg's budget.

The underlying Senate budget plan is notable chiefly for dropping Bush's proposed cuts to Medicare and for abandoning his efforts to expand health savings accounts or pass legislation to make permanent his 2001 tax cut bill.

Unlike last year, when Congress passed a bill trimming $39 billion from the deficit through curbs to Medicaid, Medicare and student loan subsidies, Senate GOP leaders have abandoned plans to pass another round of cuts to so-called mandatory programs.

But Gregg's measure re-ignites last year's battle over allowing oil drilling in Alaska's Arctic National Wildlife Refuge, since it would let Senate leaders bring an ANWR drilling measure to the floor under rules blocking a filibuster by opponents.

Defying the president, the House inserted into the supplemental spending bill a provision that blocks Dubai-owned DP World from running or managing terminals at U.S. ports.

The president supported the company and initially threatened to veto any legislation delaying or killing DP World's effort to manage terminals at six major U.S. ports.

But the White House backed off that position after the company promised to sell its American operations under fierce bipartisan pressure from Congress. And, talk of a veto is absent from a Bush administration statement about its views on the bill.

On a 377-38 vote Wednesday, the House rejected an effort to strip the DP World provision from the bill. Because DP World plans to sell its U.S. operations, the vote was largely symbolic and the provision is likely to be eliminated from the final bill when House and Senate negotiators meet later this spring to compromise differences between their versions. The Senate has not yet completed its work.

Rep. Jerry Lewis, R-Calif., chairman of the House Appropriations Committee, said Wednesday's vote sends "a strong and unmistakable message that the Congress and the American people stand united on the critical national security issue that involves the ports."

But some lawmakers derided the vote as purely for show.

"This is like making everybody feel good that they can thump their chests and say we're doing something really tough here. But it has no effect," Rep. Jim Kolbe, R-Ariz., said.

The weeks' long conflict over port security has overshadowed the bulk of the $91.8 billion spending measure, which provides $67.6 billion to pay for the wars in Iraq and Afghanistan and $19.1 billion in new money for hurricane recovery along the Gulf Coast.

Bush had requested $92.2 billion, but the House trimmed some of the hurricane-relief money.

The House is expected to overwhelmingly approve the bill. Voting against it would invite election-year criticism for Republicans and Democrats alike that they were shortchanging U.S. troops at war or abandoning Gulf Coast hurricane victims.

Because of that, Republicans have little choice but to back the measure even though some fear the impact of the spending on soaring federal deficits in a congressional election year.

The bill has been particularly difficult to swallow for conservatives, who agree that troops and the Gulf Coast need the money but object to how the administration and Congress are providing the dollars without cutting the budget elsewhere.

"We have to put our fiscal house in order," Rep. Mike Pence, R-Ind., implored colleagues on the House floor.

Conservatives were expected to try - and fail - to get the GOP leadership to split the measure in two so that the lawmakers can soften the impact on the deficit by cutting money from other programs to offset the hurricane-recovery money.

Lewis said both the troops and hurricane victims need the money urgently.

A large number of Democrats also are expected to vote in favor of the bill, even though many object to how the Bush administration is handling the Iraq war.

"I'm not convinced that providing more money for Iraq will cure the problems in that country," Rep. Nita Lowey, D-N.Y., said. But, she added, "I think we owe our men and women in uniform in Iraq every tool to achieve success."

"This is an important release for the Bank of England, which in its latest GDP projection, published in February, appeared to become more cautious on investment but more optimistic about consumer spending," said Janet Henry, of HSBC.

The Bank earlier this month left interest rates unchanged at 4.5% for the seventh month running and made it clear through its quarterly inflation report in February that it was in no hurry to lower rates.

The Bank's monetary policy committee (MPC) remains concerned at the possibility of higher energy prices feeding into higher wage claims that will push up inflation. House prices are also another area of concern as they are picking up again.

A new survey from the Royal Institution of Chartered Surveyors showed prices rising at their fastest rate since June 2004.

Those economists who believe that the Bank is too optimistic on growth think that weaker consumer spending will eventually pave the way for lower borrowing costs. However, they think that the pickup in the housing market will delay a rate cut until later in the year.

Howard Archer, of Global Insight, said: "Such a move may well be delayed until the third quarter, given the current strength of the housing market and indications from the output side of the economy that first quarter growth was probably in line with the trend rate."

For the three months to February, the value of retail sales was 2.1% higher than in the same period a year earlier. This compared to 1.3% in January.

In the February figures, the biggest rise came from clothing and footwear, up 3% on the month - following weak figures in the previous two months - while household goods remained weak at -1.1%.

"The continued contraction in household goods seems to sit uncomfortably with evidence the housing market has recovered," Ms Henry said.

The full text of the letter follows:

March 15, 2006

The Honorable Andrew Card

Chief of Staff

The White House 1600 Pennsylvania Avenue, NW Washington, DC 20500

Dear Mr. Card:

On February 8, 2006, President Bush signed into law a version of the Deficit Reduction Omnibus Reconciliation Act of 2005 that was different in substance from the version that passed the U.S. House of Representatives. Legal scholars have advised me that the substantive differences between the versions - which involve $2 billion in federal spending - mean that this bill did not meet the fundamental constitutional requirement that both Houses of Congress must pass any legislation signed into law by the President.

I am writing to learn what the President and his staff knew about this constitutional defect at the time the President signed the legislation.

Detailed background about the legislation and its constitutional defects are contained in a letter I sent last month to House Minority Leader Nancy Pelosi, which I have enclosed with this letter.[1] In summary, the House-passed version of the legislation required the Medicare program to lease "durable medical equipment," such as wheelchairs, for seniors and other beneficiaries for up to 36 months, while the version of the legislation signed by the President limited the duration of these leases to just 13 months. As the Congressional Budget Office reported, this seemingly small change from 36 months to 13 months has a disproportionately large budgetary impact, cutting Medicare outlays by $2 billion over the next five years.[2]

I understand that a call was made to the White House before the legislation was signed by the President advising the White House of the differences between the bills and seeking advice about how to proceed. My understanding is that the call was made either by the Speaker of the House to the President or by the senior staff of the Speaker to the senior staff of the President.

I would like to know whether my understanding is correct. If it is, the implications are serious.

The Presentment Clause of the U.S. Constitution states that before a bill can become law, it must be passed by both Houses of Congress.[3] When the President took the oath of office, he swore to "preserve, protect, and defend the Constitution of the United States," which includes the Presentment Clause. If the President signed the Reconciliation Act knowing its constitutional infirmity, he would in effect be placing himself above the Constitution.

I do not raise this issue lightly. Given the gravity of the matter and the unusual circumstances surrounding the Reconciliation Act, Congress and the public need a straightforward explanation of what the President and his staff knew on February 8, when the legislation was signed into law.

Sincerely,

Henry A. Waxman Ranking Minority Member

Enclosure

[1] See Letter from Rep. Henry A. Waxman to Democratic Leader Nancy Pelosi (Feb. 14, 2006).

[2] See Letter from CBO Acting Director Donald Marron to Rep. John M. Spratt, Jr. (Feb. 13, 2006).

[3] U.S. Constitution, Article I, � 7.

"The credibility of the United States, which takes a strong international stand on human rights issues, is severely damaged by the lack of protection for working people, especially the most vulnerable, within its own borders," says ICFTU Secretary-General Guy Ryder.

This only encourages other governments to seek a competitive advantage in global markets by violating the fundamental rights of their own workers, he adds.

The ICFTU says it represents 155 million workers in 236 affiliated organizations in 154 countries and territories.

The study provides a long list of rights violations, including breaches of international conventions relating to child labor, and discrimination against undocumented migrant workers.

A 2002 ruling by the U.S. Supreme Court, the highest judicial body in the country, stated that undocumented workers are not entitled to back pay as a remedy for unfair labor practices and they are not entitled to reinstatement.

"This ruling has therefore made it difficult to enforce trade union rights of several million undocumented workers," (mostly Mexicans), says the report.

According to the study, the United States is also in violation of conventions it has ratified with the Geneva-based International Labor Organization (ILO), an agency of the United Nations.

Although the United States has ratified the ILO Convention No. 182 on the worst forms of child labor, says the report, child labor remains a problem in the United States, particularly in agriculture, where fewer regulations apply and children are exposed to hazardous working conditions.

"Many children work long hours in the fields and are exposed to dangerous pesticides, sharp knives and heavy equipment. At the same time the number of inspections for the enforcement of child labor laws has decreased substantially," it says.

Furthermore, the report notes, a number of new child labor regulations have worsened safety conditions for young workers, especially by lowering the minimum age for handling dangerous operations, such as operating fryers and grills in fast food restaurants and loading of paper balers and compactors.

Asked if these U.S. violations have been identified before international bodies, Tim Noonan, ICFTU's director of campaigns and communications, told IPS that several cases have been brought before the ILO supervisory procedures in recent years.

The most recent references to U.S. labor standards -- specifically concerning freedom of association and collective bargaining -- can be found in the 2004 Global Report of the ILO under the procedures for follow-up to the Declaration on Fundamental Principles and Rights at Work entitled "Organizing for Social Justice", he said.

This report, which covers the global trends concerning "Freedom of Association and Collective Bargaining" in countries which have not ratified ILO Conventions 87 and/or 98, makes reference to threats by employers to denounce undocumented migrant workers as a barrier to unionization of those workers.

Noonan said the ILO report also singles out employer opposition to trade union organization as being a key factor in relation to relatively low levels of union membership in the U.S. private sector.

Asked how these violations could be put right, Noonan told IPS: "We believe that it is important that other governments remind the United States of its obligations as a member state of the ILO."

Furthermore, he said, there should be public pressure within and outside the United States on the current administration of Pres. George W. Bush to rectify the ongoing violations.

Noonan said the U.S. trade union movement itself "has been very active in criticizing the labor policies of the Bush administration, and finding ways to help workers organize and join unions in very difficult circumstances".

"But the laws and practices of the Bush administration are so strongly biased against trade unions that the capacity of unions to organize, campaign and lobby is restricted," he added.

For example, he pointed out, 53 percent of non-union workers in the United States say they do want to have the benefit of a union in their workplace.

Meanwhile, the ICFU study also says there is "a clear trend towards lower standards under the Bush administration".

The right to strike is only allowed for private sector workers, but even there this right is severely restricted. There are legal limitations for workers to engage in concerted activity such as intermittent strikes and secondary boycotts, according to the study.

Moreover, the law allows for permanent replacement of striking workers, and also allows for those replacement workers to vote in union decertification elections.

The report also notes that, despite the existence of Equal Opportunities legislation, women earn on average considerably less than men, as do workers from ethnic minorities.

Under EU rules the minimum period of paid annual leave cannot be replaced by an allowance, except where employment is terminated.

The judges said that payment for annual holidays included in hourly or daily pay rates - "rolled-up holiday pay" - was contrary to the working time directive.

This was because the system could lead to situations where minimum holiday was replaced just by an allowance - and annual paid leave was a key entitlement under the rules.

"The entitlement of every worker to paid annual leave is an important principle of community social law from which there can be no derogation (exception)," said the judgment.

"Holiday pay is intended to enable the worker actually to take the leave to which he is entitled."

The judgment said the working time directive clearly prevented part of a worker's pay being attributed as holiday entitlement without the worker receiving payment during holiday time.

"A regime of rolled-up holiday pay may lead to situations in which the minimum period of paid annual leave is, in effect, replaced by an allowance in lieu, which the working time directive prohibits in order to ensure that a worker is entitled to actual rest."

A group of workers complained to the Leeds' Employment Tribunal about the fact that their various employers were using the rolled-up holiday pay system instead of giving them pay for specific annual leave. The tribunal passed the case to the EU judges for a ruling under EU law.

Rolled-up holiday pay is often used by employers for workers who have unusual working arrangements. Firms argue it is often difficult to assess what the precise holiday entitlement is for some shift workers or casual employees because there is no "normal" working week.