President Barack Obama on Tuesday signed into law a last-minute compromise plan to raise the nation’s $14.3 trillion debt ceiling, narrowly averting what could have been an unprecedented default with calamitous economic consequences.
Obama’s signature capped a tumultuous negotiation with congressional leaders that spanned months before finally coming up with an agreement on Sunday, two days before the government said it would run short of money pay its bills while lacking the authority to borrow any more.
On Monday, the U.S. House passed the compromise measure by a 269-161 vote, overcoming opposition from unhappy liberal Democrats and tea party Republicans.
Then the Senate passed the plan, which imposes sweeping new spending cuts over the next decade, on a 74-26 vote on Tuesday afternoon. Shortly afterward, Obama praised the deal as “an important first step for ensuring that as a nation we live within our means.”
But the American economy “didn’t need Washington to come along with a manufactured crisis,” the president noted. “It’s pretty likely that the uncertainty surrounding the raising of the debt ceiling — for both businesses and consumers — has been unsettling, and just one more impediment to the full recovery that we need. And it was something that we could have avoided entirely.”
“Voters may have chosen divided government, but they sure didn’t vote for dysfunctional government,” the president said. He signed the deal into law less than an hour later.
If the debt ceiling had not been increased before the end of Tuesday, Americans could have seen rapidly rising interest rates, a falling dollar and shakier financial markets, among other problems, because the government would have been unable to borrow more money to account for the difference between revenue it collects and bills it owes.
Regardless, the federal government could still face a credit rating downgrade.
Credit rating agency Moody’s said Tuesday the United States will keep its sterling AAA credit rating for the time being, but lowered its outlook on U.S. debt to “negative.” A “negative outlook” indicates the possibility that Moody’s would downgrade the country’s sovereign credit rating within a year or two.
Final passage and signing of the debt ceiling agreement didn’t impress Wall Street, with the Dow Jones industrial average dropping for an eighth straight day.
By Alan Silverleib and Tom Cohen, for CNN Politico
Earlier related posts
- President Obama urges Washington to put Politics aside on Debt Deal. Read More