President Obama stated US Democrat and Republican politician leaders have come to a preliminary agreement to reduce the US deficit, increase the debt ceiling and avoid default.

Democrat and Republican leaders in US have struck a preliminary agreement deal to reduce the US deficit, raise the debt ceiling and avoid default.

President Obama informed the agreement will cut about $1tn over one decade, cutting government spending to its lowest level since the 1950s.

A special congressional committee will be set up to find another $1.5tn in savings by the end of 2011, the President stressed.
The last-minute deal, which will allow the US to increase its borrowing by $400m, still has to be approved by Congress later today.

Us debt deal : Just in time to avoid catastrophy

“President Barack Obama announced the breakthrough news in the early hours of the morning and urged politicians from both wings to back up the plan.

While the deal comes just in time to avoid a catastrophic default, Washington and investors will be closely watching to see if it goes far enough to convince credit rating agencies to let the US keep its coveted triple-A credit rating.

The Democratic-led Senate is expected to pass the deal which raises the debt ceiling and cuts about $2.4 trillion from the deficit over the next decade. The leaders of both parties in both chambers have reached an agreement that will reduce the deficit and avoid default – a default that would have had a devastating effect on our economy,” the President told reporters at the White House.

President Barack Obama urged lawmakers to “do the right thing” for American economy

House of Representatives Speaker John Boehner informed he would bring it to a vote in the chamber as soon as possible. But he told Republicans while he backed the measure it was not the “greatest deal in the world”.

If the US does not agree to increase the maximum debt level by Tuesday’s deadline the country will not have enough money to pay all its bills. Economists have claimed that defaulting on the debt could push the already fragile American economy back into recession.

The US was in danger of losing its AAA credit rating which could have meant tax rises in the form of higher interest rates on mortgages and credit cards.
Us President Obama thanked the public for their phones calls, emails and Twitter messages encouraging and pressurising Washington to make decision.

Republicans had insisted on deep spending cuts before they would consider raising the $14.3tn limit on US borrowing, turning a normally routine legislative matter into a dangerous political impasse.

US stock futures jumped and the dollar rebounded

Analysts said it was interesting that the deal was announced before the Asian financial markets opened. US stock futures jumped and the dollar rebounded after news of the agreement was announced. Although it will ease the immediate crisis, repercussions will be felt for years to come.

The measures call for a cut in spending by about $900 billion over 10 years and also contains a provision whereby a congressional committee will be responsible for finding at least $1.5 trillion more to trim.

The proposed deal will be considered by both Houses of Congress later today and could still face significant opposition.

But it may face tougher opposition in the House of Representatives where both conservative supporters and liberal lawmakers have expressed dissatisfaction with the agreement deal.

Republicans had insisted on deep spending reducements before they would consider raising the $14.3 trillion limit on US borrowing, turning a normally routine legislative matter into a dangerous game of brinkmanship.
After weeks of rigid impasse and with the final result hinging on support from recalcitrant lawmakers, President Barack Obama applied pressure upon Congress to pass the deal.

‘I want to urge members of both parties to do the right thing and support this deal with your votes over the next few days,’ President Obama stated in a televised address to nation at the White House last night.

But US President Obama, like congressional leaders, stressed that the deal isn’t what he would have preferred but it was a compromise.

 

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