With the world heaving a sigh of relief following the clinching of a much-needed deal on raising the debt ceiling by US lawmakers, top Senator Harry Reid said the agreement reached by “reasonable people” was crucial to send a reassuring message to the world.
Mr Reid, the Majority Leader in the US Senate, said the world was watching the country and the US could not take a risk of defaulting on its obligations.
“My message tonight is that this nation and this Congress are moving forward together. Reaching a long-term accord that would give our economy the certainty it needs was not easy,” Mr Reid said on the Senate floor after a deal was reached between the Republican and the Democratic leaders.
“Sometimes it seems our two sides disagree on almost everything. But in the end, reasonable people were able to agree on this: the United States could not take the chance of defaulting on our debt, risking a US financial collapse and a world-wide depression. America and the world have been watching our democracy expectantly,” he said.
Soothing many a nerve, the President, Mr Barack Obama, announced earlier that lawmakers on both sides have finally agreed to a deal to raise the debt limit beyond its present $14 trillion borrowings by at least $2.1 trillion.
The White House said the deal was a victory for bipartisan compromise, for the economy and for the people.
The bipartisan agreement would raise the debt limit and cut spending between $2 trillion and $3 trillion — $ one trillion over the next 10 years.
The deal removes the cloud of uncertainty over the economy by waiving off the possibility of America’s first debt default.
It locks in a down payment on significant deficit reduction, with savings from both domestic and Pentagon spending, and is designed to protect crucial investments like aid for college students, the White House said.
Besides establishing a bipartisan process to seek a balanced approach to larger deficit reduction through entitlement and tax reform, the deal deploys an enforcement mechanism that gives all sides an incentive to reach bipartisan compromise on historic deficit reduction, while protecting social security, medicare beneficiaries and programmes for low-income people.
Leaders from both parties and in both chambers will present this agreement to their respective caucuses today.
“To pass this settlement, we’ll need the support of Democrats and Republicans in both the House and Senate. There is no way either party — in either chamber — can do this alone,” Mr Reid said.
The White House said the deal immediately enacted 10-year discretionary spending caps generating nearly $1 trillion in deficit reduction, balanced between defence and non-defence spending.
“President authorised to increase the debt limit by at least $2.1 trillion, eliminating the need for further increases until 2013,” it said, adding that bipartisan committee process tasked with identifying an additional $1.5 trillion in deficit reduction, including from entitlement and tax reform.