The US Congress has given final approval to a bill raising the country’s debt limit, just hours before the Treasury’s authority to borrow funds runs out.
After the House of Representatives, the Senate has now backed a last-ditch deal reached between rival Republicans and Democrats.
“This compromise requires that both parties work together on a larger plan to cut the deficit which is important for the long term health of our economy. And since you can’t close the deficit with just spending cuts, we will need a balanced approach, with everything on the table,” President Barack Obama said after the vote.
The deal raises the government’s borrowing limit by at least two trillion dollars, cutting spending by a similar amount over 10 years. Its passage ends a bitter political stalemate that threatened chaos in global financial markets.
While Congressional approval does remove the threat of imminent default, the US could still be heading for a damaging credit rating downgrade. The proposed savings are far short of those agencies have said are needed to confirm the country’s AAA status with a stable outlook.
Congress vote averts US default