Obama signs legislation to avert defaultPosted: Updated:
(AP) - The U.S. avoided a feared and catastrophicdefault on the American debt, as lawmakers on Tuesday passed ameasure that ties an agreement to raise the government's capacityto borrow to steep cuts in government spending.
The Senate passed the measure Tuesday, a day after it passed theHouse of Representatives, and President Barack Obama quickly signedit into law.
The emergency bill increases the nation's $14.3 trillion cap onborrowing, thus avoiding default just hours before the midnightdeadline, and begins the process of curbing the country's spiralingdebt.
The administration had said the government could not pay all itsbills without the new borrowing authority, and it warned thatdefault would severely damage the global economy and push the U.S.back into recession or worse. Even with the legislation now inplace, there are fears that the last-minute sparring could shakerating agencies' confidence and harm the country's Triple-A creditrating.
Though the compromise deal passed, it deeply angered bothconservative Republicans and liberal Democrats. Many Republicanscontended the bill still would cut too little from federalspending; many Democrats said much too much.
A deeply frustrated Obama, while praising Congress for finallypassing the compromise bill, demanded legislators immediately turntheir attention to fixing the economy and creating jobs.
"We've got to do everything in our power to grow this economyand put America back to work," he said, shortly after the Senatevoted 74-26 to pass the measure.
He also said he was not giving up on his insistence thatCongress allow taxes to be raised on big corporations, through anend to loopholes, and the richest Americans once both houses returnfrom their summer recess in early September. The measure that nowbecomes law relies wholly on cutting spending as a tool forlowering the American deficit.