UPDATE: The Senate has passed the debt bill, with less than twelve hours to go until the U.S. would have run out of money to pay its bills. The President is expected to sign the bill later today. The bill cleared the Senate with 74 votes for and 26 against.
UPDATE 2: President Obama signed the bill into law shortly following the bill’s approval in the Senate.
The House of Representatives today passed a bipartisan bill to raise the debt limit and cut spending as a last-ditch effort to avoid a default on the government’s debt. Such a default would lead to the potential loss of the United States’ AAA credit rating, resulting in increased interest rates that could threaten the American (and in turn the global) economic recovery. The bill must become law by the end of Tuesday, August 2nd, to avoid the default. The democrat-led Senate will vote on the bill Tuesday at 12:00 noon. The bill raises the debt limit by $2.4 trillion and cuts $2.1 trillion over a period of ten years.
The vote breakdown:
269 for, 161 against
95 for, 95 against
174 for, 66 against
Both extreme right-wing and extreme left-wing representatives were unhappy with the bill, conservatives because they felt savings were not high enough, and liberals because the plan relied on cuts alone and did not include increased revenue from taxes. Members of the tea party opposed raising the debt ceiling at all.
President Obama stated that the bill was a “serious down payment,” though not the one he would have preferred.
Formerly, the Republican-leaning plan from Speaker of the House John Boehner died in the Democratic senate, and the Democrat-friendly plan authored by Senate Majority Leader Harry Reid was killed by the Republican-dominated House.
The cuts will not affect certain social programs (Social Security, Medicare, and Medicaid). The bill makes $900 billion in cuts over 10 years, and requires a 12-member committee to draft additional cuts of up to $1.5 trillion over the same period. The so-called “balanced budget amendment” is part of the bill as well. It requires the legislature to vote on this at a later date.
Compiled from BBC reports. For further reading, just about every news service has covered this extensively.