Senate voted 74-26 Tuesday to raise the federal government’s debt ceiling, sending the bill to President Barack Obama for his signature less than 12 hours before the U.S. was expected to run out of money to pay its bills.
Pennsylvania's senators were split, with Democrat Robert P. Casey Jr. voting for the bill and Republican Pat Toomey voting against it.
The House passed the bill Monday night. The legislation allows the president to raise the debt limit by up to $2.4 trillion in three stages, enough to allow the government to cover its obligations through the end of 2012. The bill also calls for federal budget deficits to be reduced by more than that amount over the next 10 years. Congress also will be required to vote on a constitutional amendment requiring it to balance its budget.
Obama said passage of the legislation was an "important first step to ensure that as a nation we live within our means." But he said Congress must take other steps to grow the economy and create jobs, such as passing patent reform, enacting trade deals and creating a national infrastructure bank.
"It shouldn't take the risk of default, the risk of economic catastrophe to get folks to work together and do their jobs," the president said.
The debt ceiling compromise was hashed out between Obama and congressional leaders over the past weekend. Even supporters of the deal said it fell short of what they wanted. But they contended it was necessary to avoid a government default on its debt, which would have led to higher interest rates and other problems for an already-weak economy.
Moments before his remarks, senators voted 74 to 26 to pass the Budget Control Act, the last hurdle for the controversial measure that was first approved by the House Monday night, making a $2.4 trillion down-payment on the federal deficit over the next 10 years.
Obama's signature ends a bruising Washington-made crisis that has gripped the country and lifts what the administration has called a "cloud of uncertainty hanging over the economy.
The uncertainty surrounding the raising of the debt ceiling for both businesses and consumers has been unsettling," Obama said, "and just one more impediment to the full recovery that we need, and it was something we could have avoided entirely."
But the 2011 fight over the debt and deficit is only half over, and plenty of economic uncertainty abounds.
Congress and the administration still need to agree on $1.5 trillion more in budget savings by the end of the year, a likely battle that will feature many of the same ideological and philosophical tensions that have defined the debate of the past few months.
Will there be additional spending cuts, and from where? Will the parties agree on closing corporate tax loopholes, eliminating deductions or revising income tax rates?
What about changes to federal entitlement programs, such as Social Security, Medicare and Medicaid? Will they be in play?
A special bipartisan "super committee" of 12 lawmakers is tasked with considering those questions and making recommendations that will later be put before their peers in the House and Senate for a vote by December.
If they don't succeed, the new law would impose steep, automatic cuts across the federal budget, including defense programs and Medicare. Lawmakers also must consider whether to extend a payroll tax cut and unemployment insurance benefits.
As members of Congress prepare to leave town for the August recess, Obama reiterated his position on the debate that will resume when they return this fall.
"I've said it before, I'll say it again," Obama said. "We can't balance the budget on the backs of the very people who have borne the brunt of this recession. Everyone has to chip in. It's only fair. That's the principle I'll be fighting for in the next phase."
How the process plays out next is anybody's guess given the course of the tense negotiations in the past few months and the persistent partisan atmosphere inside the Beltway.
But leaders on both sides of the aisle today claimed victory for their constituencies in the latest debt compromise.
American people sent a wave of new lawmakers to Congress in last November's election with a very clear mandate: to put our nation's fiscal house in order," McConnell said, "And I want to assure you today that although you may not see it this way, you've won this debate."
Senate Majority Leader Harry Reid, D-Nev., concluded that the American people, not the Tea Party, are the real victors of the debate.
"There's one winner throughout all of this and that's the American people," Reid said on the Senate floor, adding that McConnell "boasted" about the Tea Party senators.
"I welcome them all," Reid said of the new Tea Party senators, "but as result of the Tea Party direction of this Congress, these last few months has been very very disconcerting and very unfair to the American people."
Meanwhile, the impact of the situation on the economy remains a matter of debate.
This agreement itself, on its own, doesn't create jobs. What it does is it avoids doing more damage in the short term, because the president refused to accept the types of deep spending cuts that many in Congress wanted," Treasury Secretary Timothy Geithner said on "Good Morning America."
"You're going to see this basic underlying growth we've see in the United States improve over time because people will be more confident we can live within our means," he said. "With more confidence we can get our arms around this long term. We will have more room to do the things we need to strengthen investment jobs now."
But some Democrats and liberal economists disagree, saying the cuts enacted today will have an immediate negative impact on the economy.
"The spending cuts in 2012 and the failure to continue two key supports to the economy [the payroll tax holiday and emergency unemployment benefits for the long term unemployed] could lead to roughly 1.8 million fewer jobs in 2012, relative to current budget policy," said John S. Irons, an economist with the liberal-leaning Economic Policy Institute.
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