The House of Representatives passed the debt ceiling deal late yesterday, signalling the final stage of the long and arduous crisis that had threatened to result in the US defaulting on its $14.3 trillion debt.
The Senate is expected to pass The Senate is expected to pass the same Bill today, in time to be signed by President Barack Obama before the deadline at midnight tonight.
The vote passed by a comfortable majority of 269 to 161 votes, after a day of intense behind-thescenes campaigning by Democratic and Republican leaders. Representative Gabrielle Giffords, who was shot in the head by a deranged gunman in Tucson Arizona last January, returned to the Capitol for the first time last night to participate in the vote. The threat of default has been an embarrassment to US politicians, domestically and internationally.
The Russian prime minister, Vladimir Putin, yesterday told a youth rally in Russia that US debt is “a parasite” that threatens the global financial system. Relief greeted the announcement of a deal between Congressional leaders and the White
House on Sunday night, but it quickly became obvious yesterday morning that conservatives disliked the Bill because of cuts on defence spending, while liberals objected to the absence of tax increases on the rich and corporations. “People on the right are upset. People on the left are upset. People in the middle are upset,” the Democratic Senate majority leader Harry Reid said on the Senate floor.
Speaker of the House John Boehner interrupted his day-long efforts to rally Republican support for the Bill at a press conference where he was flanked by prominent Republicans. “The big win here for us and for the American people is that there are no tax hikes in this package,” the House majority leader Eric Cantor said. The White House sought to dampen Republican triumphalism about the absence of tax hikes by promising that Mr Obama will veto any attempt to extend Bush era tax cuts for the rich beyond 2012.
Representative Paul Ryan, who heads the House budget committee, and whose draft budget last spring proposed transforming Medicare for the elderly into a voucher programme, said the debt deal was “a good step in the right direction, a huge change in the culture of spending.” Mr Ryan said the deal achieves twothirds of the cuts Republicans wanted.
Like the so-called Boehner Bill passed by the House and rejected by the Senate on Friday evening, the deal will initially cut spending by $917 billion and raise the debt ceiling by $900 billion. Mr Obama had threatened to veto any Bill that replayed the debate a few months from now, as Republicans wanted. Spending cuts and tax increases are nonetheless likely to dominate US politics for the foreseeable future.
In the final deal, Republicans’ demand for passage of a balanced budget amendment was transformed to the stipulation that if a bipartisan commission cannot agree on another $1.5 trillion in cuts by Thanksgiving, either a balanced budget amendment must be passed or cuts will be made automatically across the board.
“This will be a case study one day for college students on failed politics,” David Gergen, the director of Harvard University’s Centre for Public Leadership, told Bloomberg News.
After complaining that the Bill takes “not one red cent from the wealthiest people in our country”, the House minority leader Nancy Pelosi grudgingly agreed to vote for it, to spare the US from default.
In his televised address at 8.40pm on Sunday, Mr Obama admitted that, “This process has been messy; it’s taken far too long. I’ve been concerned about the impact that it has had on business confidence and consumer confidence and the economy as a whole over the last month.”
Stock markets initially rallied on news that a deal had been struck, but then lost ground because of a commerce department report showing that US manufacturing grew at its slowest pace in two years in July.