President Barack Obama has reached a deal with congressional leaders to reduce the public deficit and to avoid a the first US government default in history.
The bipartisan plan to raise the borrowing limit will be presented to rank and file Democrats and Republicans later on Monday.
At the heart of the agreement is a cut of one trillion dollars over ten years. A panel will then be set up to find at least another $1.5 trillion dollars worth of savings.
Appearing on television Obama said the whole process to end the debt impasse had been messy.
“Is this the deal I would have preferred? No.” said President Obama. “I believe we could have made the tough choices required on entitlement reform and tax reform right now rather then through a special congressional committee process. But this compromise does make a serious down payment on the deficit reduction we need and gives each party a strong incentive to get a balanced plan done before the end of the year.”
Financial markets immediately showed signs of relief with a deal in the making ahead of Tuesday’s deadline which is when the current money runs out.
But it is still not clear if Washington has done enough to avoid a credit rating downgrade over the next few days.