WASHINGTON (BDCi) – Earlier this morning, the United States Senate approved a bill that would raise the debt ceiling through early 2013 in exchange for an equal amount of budget cuts over 10 years by a margin of 76 to 24 votes.
An hour later, President Obama signed the bill into law, and the world’s strongest economy avoided what many viewed would be a cataclysmic default if the U.S. failed to raise the debt ceiling by the midnight deadline.
Terms of the accord call for the debt ceiling to be raised $2.1 trillion through early 2013 while the same amount would be saved over 10 years in cost reductions that would be triggered in two stages. The first stage would see $900 billion of cuts that were broadly agreed to in these negotiations between the two parties.
The second batch of reductions -$1.2 trillion – would be recommended by a special committee of 6 congress persons to be named later, and if that committee’s suggestions were not agreed to by Thanksgiving of this year, then an automatic reduction mechanism would be put in place.
In a statement after the signing of the law, President Obama called it “an important first step”.
By Don Weinstein
Source: Reuters 2 August 2011
12:05p.m. P.D.T.