Wednesday, August 3, 2011

United States President Barack Obama on Tuesday signed into law a bill that raised the US debt limit, averting a predicted default on the government’s bills, among other economic ramifications.

The bill in question was the result of a deal announced by Obama on Sunday. It was approved by the House of Representatives on Monday night 269–161, passed the Senate early Tuesday afternoon 74–26, and was subsequently signed by Obama.

Under the terms of the bill, the debt limit can be raised from its previous level of US$14.3 trillion by $900 billion. An amount of $400 billion can be immediately authorized by the President, while the rest is still subject to Congressional approval. Along with the increase, there will be an immediate budget cut of $917 billion, with total savings of at least $2.1 trillion over the next decade.

In the longer term, the bill allows the establishment of a special bipartisan committee of lawmakers from both the Senate and House to come up with proposals to reduce the federal budget deficit by at least another $1.5 trillion. Those proposals will be voted on no later than December 23, at which point the debt limit can be again increased, by up to $1.5 trillion if the committee’s proposals are approved or by $1.2 trillion if they fail.