Debt-Limit Bill Passes, Obama Signs Legislation To Avert Default

WASHINGTON (AP) — The Senate emphatically passed emergency legislation Tuesday to avoid a first-ever government default, rushing the legislation to President Barack Obama for his signature just hours before the deadline. The vote was 74-26.

Obama signed the bill privately in the Oval Office little more than an hour after the Senate voted final passage. It capped months of contentious and partisan debate.

Tuesday’s vote capped an extraordinarily difficult Washington battle pitting Tea Party Republican forces in the House against Obama and Democrats controlling the Senate. The resulting compromise paired an essential increase in the government’s borrowing cap with promises of more than $2 trillion of budget cuts over the next decade.

Much of the measure, which the House passed Monday night, was negotiated on terms set by House Speaker John Boehner, including a demand that any increase in the nation’s borrowing cap be matched by spending cuts. But the legislation also meets demands made by Obama, including debt-limit increases large enough to keep the government funded into 2013 and curbs on growth of the Pentagon budget.

“We’ve had to settle for less than we wanted, but what we’ve achieved is in no way insignificant,” said Senate GOP leader Mitch McConnell of Kentucky. “But I think it was the view of those in my party that we’d try to get as much spending cuts as we could from a government we didn’t control. And that’s what we’ve done with this bipartisan agreement.”

Many supporters of the legislation lamented what they saw as flaws and the intense partisanship from which it was forged. In the end, it was a lowest-common-denominators approach that puts off tough decisions on tax increases and cuts to entitlement programs like Medicare.

“What troubles me about it is that the bipartisan compromise also represents a kind of bipartisan agreement by each party to yield to the other party’s most politically and ideologically sensitive priority,” said Joseph Lieberman, I-Conn. “In the case of Democrats, it’s to protect entitlement spending. … In the case of Republicans, it’s to not raise taxes.”

The measure would provide an immediate $400 billion increase in the $14.3 trillion U.S. borrowing cap, with $500 billion more assured this fall. That $900 billion would be matched by cuts to agency budgets over the next 10 years.

The Senate vote was never in doubt after Majority Leader Harry Reid, D-Nev., and McConnell signed on. But like Monday’s House vote, defections came from liberal Democrats unhappy that Obama gave too much ground in the talks, as well as from conservative Republicans who said the measure would barely dent deficits that require the government to borrow more than 40 cents of every dollar it spends.

“This is a time for us to make tough choices as compared to kick the can down the road one more time,” said freshman GOP Sen. Jerry Moran of Kansas.

The measure sets up a fall drama that promises to again test the ability of Obama and Republicans to work cooperatively.

It establishes a special bipartisan committee to draft legislation to find up to $1.5 trillion more in deficit cuts for a vote later this year. They’re likely to come from such programs as federal retirement benefits, farm subsidies, Medicare and Medicaid. The savings would be matched by a further increase in the borrowing cap.

There’s no guarantee the committee, to be evenly split between the warring parties, will agree on such legislation. But there are powerful incentives to do so because more budget gridlock would trigger a crippling round of automatic cuts across much of the budget, including Pentagon coffers.

And questions linger about the effect the grueling political free-for-all will have on the U.S. credit rating.

Treasury Secretary Timothy Geithner told ABC News that he didn’t know whether the debt-limit fight would cause America’s AAA credit rating to be downgraded.

“It’s not my judgment to make,” he said.

Geithner also said he fears world confidence in the United States was damaged by “this spectacle.”

Enactment of the measure provides welcome closure for Obama, who has seen his poll numbers sag during the debt-limit battle. GOP presidential candidates such as Mitt Romney and Michele Bachmann issued statements opposing the legislation.

“As with any compromise, the outcome is far from satisfying,” Obama conceded in a video his re-election campaign sent to millions of Democrats.

In a tweet, the president was more positive: “The debt agreement makes a significant down payment to reduce the deficit finding savings in both defense and domestic spending.”

(Copyright 2011 by The Associated Press. All Rights Reserved.)

  • Alan

    The deficit is the money the government borrows each year. You cannot (repeat, CANNOT) lower borrowing by borrowing more. I can teach this to a two year old; why can’t the “mainstream” media understand it?

  • commonsense

    How is this a hard concept? The gov’t takes in plenty of money every month to pay their bills and run a good many programs. The sad part is now we have to many programs. Do you really need to a gov’t paid cell phone plan to give people FREE cell phones with FREE minutes? Where is that in the constitution?

    How about section 8 housing? I can drive through several section 8 complexes and there are 30-40k dollar cars parked in front of their townhouses/apartment. There are people on food stamps who has a shoe collection worth more then my savings account yet we still provide them free stuff.

    Department of Education, Dept. of Transportation, and the EPA are all wasteful spending that can be cut. Not one kid in America is smarter from the citizens paying state taxes, the state sending the money to the fed via Dept. of ED, then the Dept. of ED handing it back to the states under ” grants”. It’s their money to begin with.

    Why does 40% of Americans pay taxes? What are these other people doing? If you are capable of working get out there and work. There are plenty of jobs on the market I dont care what you say. People dont want to do the dirty jobs that might not pay as much as your 60k dollar a year I.T. job did…but I bet if the gov’t cut off your checks you’d be willing to go out there and work for food.

    Cut Entitlements and programs that arent needed. The money is already there…you just arent spending it proeprly you ilks.

    Entitlement programs is a modern day form of Slavery yet that social class is to dumb or careless to pick it up on it. Instead of working for you bare necessity like houses and food now they give you housing and food for your VOTE.

  • Workfare,NotWelfare

    There’s no excuse at all to not limit Obama to one term. Voting essentially anyone in but that crackpot Bachmann would be an instant improvement.

  • cantueso

    And the curious fact that in this context nobody ever mentions the cost of the wars.
    Of course it is problematic. If all those soldiers came home, would they find work?
    If the wars ended, would the arms industry collapse?

  • DemsKilledEconomy

    NEW YORK (AP) — A sell-off is erasing all of the year’s gains in the stock market.

    The Standard & Poor’s 500 lost 2.6 percent Tuesday as investors grew increasingly concerned about the economy. The benchmark index is now at its lowest point of the year.

    A report that consumers cut their spending in June for the first time in two years added to a series of weak economic indicators have pushed stocks lower for seven straight days.

    The S&P is closing down 33 points to 1,254. The Dow Jones industrial average is down 266, or 2.2 percent, to 11,867. The Nasdaq is down 75, or 2.8 percent, to 2,669.

    Four stocks fell for every one that rose on the New York Stock Exchange. Volume was higher than average at 5.3 billion shares.

  • DemocratEatsSouls

    no such thing as a free lunch, i can’t wait til you poor people have nothing left!
    your vote is useless now, no one will pay you off.


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