Obama strikes debt deal ahead of voting
01 Aug 2011
President Obama and congressional leaders are reported to have hammered out a deal to avert a possible debt default by the US government. But the tentative debt limit agreement involves extensive spending cuts that could undermine US economic growth and job creation that are sordidly needed.
The deal would cut $2.4 trillion in government spending over the next 10 years while also raising the amount of money it can borrow by at least $2.1 trillion, helping to avoid another showdown at today's voting, ahead of the 2 August debt-default deadline.
Under the deal, a new congressional committee would be formed to recommend a deficit reduction proposal, which would be put to vote before Christmas.
The agreement, worked out by Obama, House Speaker John Boehner, Senate Democratic leader Harry Reid and Senate Republican leader Mitch McConnnell, would help the US government avert a possible debt default.
The US, which has a debt ceiling of $14.3 trillion, was widely expected to exceed that limit by 2 August, beyond which the government would lose the ability to pay its bills for money already spent.
"I know this agreement won't make every Republican happy. It certainly won't make every Democrat happy," Senate majority leader Harry Reid said on Sunday.
