UpdateUS House approves crucial debt ceiling bill

02 August 2011 01:05  [Source: ICIS news]

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WASHINGTON (ICIS)--The US House of Representatives voted 260-161 on Monday to approve a controversial debt ceiling bill, and the measure is expected to get Senate approval and President Barack Obama’s signature on Tuesday.

With 66 Republicans voting against the $2.4 trillion (€1.66 trillion) measure to increase the government’s borrowing authority, the bill needed support from 95 Democrat House members to reach the 217 majority vote level needed for passage.

In a package that was agreed upon by congressional Republicans and the White House on Sunday, the US would have authority to raise its current debt ceiling of $14.3 trillion by an immediate $1 trillion and thus avoid a potential default this week.

The deal includes a cut of $1 trillion in US federal spending over the next 10 years.

It also provides for as much as an additional $1.5 trillion in borrowing authority, providing a special congressional committee can identify - and Congress can approve - an equal value of further debt reduction measures before the end of this year.

With the House vote done, the debt ceiling bill was expected to get quick approval by the Senate on Tuesday morning. 

President Obama was likely to sign the measure into law at midday Tuesday.

Although the measure serves to avoid what many thought would be catastrophic financial results if the US were to begin defaulting on its sovereign debt obligations, analysts say the agreement might not be sufficient to ward off a reduction in the US triple-A credit rating.

($1 = €0.69)

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By: Joe Kamalick
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