US prepares for crucial debt votes
Published 01/08/2011 | 02:02
Both houses of the US Congress are lining up votes on the bitterly fought deal with President Barack Obama to raise the limit on US borrowing and forestall an unprecedented American default.
Agreement came after weeks of outright partisan warfare. Mr Obama said the plan cuts domestic spending to levels not seen in more than 50 years. But many of the tea party-backed Republican first-term members of the House of Representatives and their liberal Democratic counterparts remained deeply dissatisfied with the measure.
While it was widely expected the plan would pass, given that it was crafted to thread the needle between the philosophically opposite ends of the political spectrum, there were still no guarantees.
Tuesday is the deadline to avoid a US default on payments to investors in Treasury bonds, recipients of Social Security pension checks, those relying on military veterans' benefits and businesses that do work for the government.
The deal aims to prevent a downgrade of America's credit rating, and news of the agreement buoyed global investors as world stock markets jumped on Monday. US stocks climbed after opening but slipped well into negative territory after a bad report on American manufacturing.
Shortly after Senate Majority Leader Harry Reid and his Republican counterpart, minority leader Mitch McConnell, endorsed the plan on the Senate floor on Sunday night, Mr Obama went to the White House press room to add his support for the deal. It meets one of his key demands, raising borrowing power sufficiently to keep the divisive issue from returning to the national agenda until after the 2012 election. It does not include any tax increases that he had pressed hard to include.
House Speaker John Boehner, in a conference call with Republican members of the lower chamber, said the deal was a good one that met the demands of all Republicans.
Bowing to the still unknown outcome of congressional action, Mr Obama said important votes remained to be taken but that leaders of both parties in both houses of Congress were agreed to a plan that would initially cut about a trillion dollars from US spending, "the lowest level of domestic spending since Dwight Eisenhower was president" in the 1950s.
"Is this the deal I would have preferred? No." said Mr Obama.
But he said: "Most importantly it will allow us to avoid default and end the crisis that Washington imposed on the rest of America. And it will allow us to lift the cloud of doubt and uncertainty" that has hung above the United States for weeks.