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With hours before default deadline, US Senate votes on debt ceiling package

Tuesday, August 2nd 2011 - 07:27 UTC
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Bill raises debt ceiling into 2013 leaving 2012 clear for Obama’s re-election campaign Bill raises debt ceiling into 2013 leaving 2012 clear for Obama’s re-election campaign

US House of Representatives has passed by 269 votes to 161 a last-gasp deal to avoid a federal debt default. The bill is expected to be approved by the Senate and signed into law by President Barack Obama on Tuesday.

It raises the debt limit by up to 2.4 trillion dollars from 14.3tn - making savings of at least 2.1tn in 10 years.

After months of bitterly partisan deadlock, House Republican and Democratic leaders swung behind the bill on Monday, ratifying a deal sealed the night before with a phone call from House Speaker John Boehner to President Obama.

House Democrats were evenly split on the legislation - 95 for and 95 against - while 174 Republicans voted for the measure and 66 opposed it.

Senate Democratic Majority Leader Harry Reid said the upper chamber would vote on the deal at 12:00 local time (16:00 GMT) on Tuesday. That vote will take place barely 12 hours before Washington is due - according to the US treasury department - to become unable to meet all its bills.

The vote in the Republican-controlled House was considered the biggest obstacle to the legislation; its approval by the Democratic-controlled Senate is viewed as all but certain.

In a key point for President Obama, the bill would raise the debt ceiling into 2013 - meaning he would not face another congressional showdown on spending in the middle of his re-election campaign next year.

The compromise deal deeply angered both right-wing Republicans and left-wing Democrats. Liberals have been unhappy that the plan relies on spending cuts only and does not include tax rises, although Mr Obama could still let Bush-era tax cuts for the top brackets expire in January 2013.

House Republicans were displeased that the bill did not include more savings.

Announcing the deal on Sunday evening, President Obama said though it was not the one he would have preferred, it was a “serious down payment” on the US deficit.

Earlier, Vice-President Joe Biden lobbied dissenting Democrats. The bill was the focus of criticism, some of it anguished, from both sides of the House.

“I did not come to Washington to force more people into poverty,” said Democratic congressman Jim McGovern. His colleague, Emanuel Cleaver, described the deal as “a sugar-coated Satan sandwich” on his Twitter feed.

Republican Representative Mark Mulvaney said: “At the end of the day, Washington's spending still has us sprinting toward a fiscal cliff. And this bill barely slows us down.”

The deal would enact more than 900bn in cuts over the next 10 years. It would also establish a 12-member House-Senate committee charged with producing up to 1.5tn dollars of additional deficit cuts over a decade.

If the panel failed to produce at least 1.2tn in deficit savings, then spending cuts would take effect across much of the federal budget.

The Pentagon would be among those areas affected, but in a concession to Democrats, individual benefits under Social Security, Medicaid and Medicare would be exempt.

The political stalemate has unsettled financial markets, endangered Washington's coveted triple-A credit status, and exasperated Americans still grappling with unemployment of 9.2%. (BBC).-
 

Categories: Economy, Politics, United States.

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