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President Barack Obama on Tuesday signed into law a last-minute compromise plan to raise the nation's $14.3 trillion debt ceiling, narrowly averting what could have been an unprecedented default with calamitous economic consequences.
Obama's signature capped a tumultuous negotiation with congressional leaders that spanned months before finally coming up with an agreement on Sunday, two days before the government said it would run short of money pay its bills while lacking the authority to borrow any more.
On Monday, the U.S. House passed the compromise measure by a 269-161 vote, overcoming opposition from unhappy liberal Democrats and tea party Republicans.
Then the Senate passed the plan, which imposes sweeping new spending cuts over the next decade, on a 74-26 vote on Tuesday afternoon. Shortly afterward, Obama praised the deal as "an important first step for ensuring that as a nation we live within our means."
But the American economy "didn't need Washington to come along with a manufactured crisis," the president noted. "It's pretty likely that the uncertainty surrounding the raising of the debt ceiling -- for both businesses and consumers -- has been unsettling, and just one more impediment to the full recovery that we need. And it was something that we could have avoided entirely."
"Voters may have chosen divided government, but they sure didn't vote for dysfunctional government," the president said. He signed the deal into law less than an hour later.
If the debt ceiling had not been increased before the end of Tuesday, Americans could have seen rapidly rising interest rates, a falling dollar and shakier financial markets, among other problems, because the government would have been unable to borrow more money to account for the difference between revenue it collects and bills it owes.
Regardless, the federal government could still face a credit rating downgrade.
Credit rating agency Moody's said Tuesday the United States will keep its sterling AAA credit rating for the time being, but lowered its outlook on U.S. debt to "negative." A "negative outlook" indicates the possibility that Moody's would downgrade the country's sovereign credit rating within a year or two.
Final passage and signing of the debt ceiling agreement didn't impress Wall Street, with the Dow Jones industrial average dropping for an eighth straight day.
The agreement reached Sunday by Obama and congressional leaders from both parties calls for up to $2.4 trillion in savings over the next decade, raises the debt ceiling through the end of 2012 and establishes a special congressional committee to recommend long-term fiscal reforms.
Emotions ran high during the final debates on Capitol Hill. Numerous Republicans remained worried about cuts in defense spending and the lack of a required balanced budget amendment to the Constitution. Progressive Democrats were livid over the extent of the deal's domestic spending cuts, as well as the absence of any immediate tax hikes on high-income Americans.
"On this matter, my conscience is conflicted," Sen. Dick Durbin, D-Illinois, said Tuesday morning. "If we should default on our debt, terrible things will ensue."
But if "we continue to move toward more and more spending cuts, we will literally disadvantage the poor and working families of America to the advantage of those who are well off," Durbin said.
Sen. Mark Kirk, R-Illinois, praised the agreement as "a down payment on further ways to bring common sense ... to the spending of our government,"
"If we fail, we deliver a free people into the hands of financial bondage," he warned.
Sen. Joe Lieberman, an independent from Connecticut who is part of the Democratic caucus, called the deal a first step in "a long, hard march back to fiscal responsibility in our country."
"Nobody seems perfectly satisfied with it, but that's inevitable," Lieberman said. "For me, the positive outweighs the negative."
GOP leaders sold the deal to skeptical rank-and-file Republicans in recent days by arguing that it will finally begin the process of reforming spending and taming the growing debt, a key goal of conservatives who fueled the GOP takeover of the House in last year's midterm elections.
Top Democrats have focused on the fact that the bill preserves benefits from popular entitlement programs such as Medicare and takes the politically problematic debt ceiling issue off the table until 2013.
In the end, the majority of both Democrats and Republicans supported the legislation in the Senate.
In the House, Speaker John Boehner, R-Ohio, was able to round up the support of most of his GOP caucus, while the chamber's two top Democrats -- Minority Leader Nancy Pelosi of California and Minority Whip Steny Hoyer of Maryland -- voted for the plan along with more than 90 of their caucus members.
One of those supporting the plan was Rep. Gabrielle Giffords, D-Arizona, who cast her first House vote since being shot in the head in an assassination attempt in January. She received an emotional ovation when she entered the chamber.
In an op-ed to be published Wednesday in the Washington Post, Treasury Secretary Tim Geithner argued that the process of forging the agreement was terrible, but the result is good.
"The agreement creates room for the private sector to continue to grow, without the threat of default and the burden of higher interest rates," Geithner wrote, noting the measure passed Tuesday locks in at least $2 trillion in long-term savings that are "phased in gradually to avoid hurting the economy in the near term."
Referring to the pressure exerted by tea party conservatives in the House on the negotiating process, Geithner also wrote that because the agreement allows the debt ceiling to be extended through 2012, "it should not be possible for a small minority to threaten catastrophe if the rest of the government decides not to embrace an extreme agenda of austerity and the dismantling of programs for the elderly and the less fortunate."
The agreement revolves around a two-stage process.
The first stage includes $917 billion in savings, including a roughly $420 billion reduction in the national security budget. The cuts will be accompanied by a $900 billion increase in the debt ceiling.
Because of the need to immediately increase borrowing, Obama has immediate authority to raise the debt ceiling by $400 billion, which will last through September. The other $500 billion increase in the debt limit is subject to a congressional vote of disapproval that can be vetoed by the president.
In the second stage, a special joint committee of Congress will recommend further deficit reduction steps totaling $1.5 trillion or more, with Congress obligated to vote on the panel's proposals by the end of the year.
The committee will comprise 12 members, six from each chamber, equally divided between Democrats and Republicans. The panel's recommendations are due by November 23 and are guaranteed an up-or-down vote without amendments by December 23.
The committee is expected to consider politically sensitive reforms to the tax code and entitlement programs, though Democrats and Republicans disagree on the likelihood of any eventual revenue increases.
If the committee's recommendations are enacted, Obama will be authorized to increase the debt ceiling by up to $1.5 trillion. If the recommendations are not enacted, Obama can still raise the debt ceiling by $1.2 trillion. At that point, however, a budget "trigger" will kick in, imposing mandatory across-the-board spending cuts matching the size of the debt ceiling increase.
The cuts would be split between defense spending and non-defense programs, an unpopular formula intended to motivate legislators to approve the committee's recommendations.
"You want to make it hard for (lawmakers) just to walk away and wash their hands," Gene Sperling, the director of Obama's National Economic Council, said Sunday. "You want them to say, if nothing happens, there will be a very tough degree of pain that will take place."
The final debt ceiling increase in the agreement is also subject to a congressional vote of disapproval that can be vetoed by Obama.
The agreement calls for both houses of Congress to vote on a balanced budget amendment to the Constitution, though it does not make a further increase in the debt limit subject to congressional passage of such an amendment -- something tea party conservatives were initially demanding.
Leaders on both sides of the aisle have openly conceded that the deal is far from perfect.
"Neither side got what they wanted," Senate Majority Leader Harry Reid, D-Nevada, said Tuesday. "Each side laments some of the things we had to give up, but that's the way it is."
A new CNN/ORC International Poll shows that only 44% of Americans approve of the debt ceiling deal, while 52% disapprove.
According to the Monday survey, Republicans dislike the fact that the deal raises the debt ceiling through 2013, while Democrats dislike the lack of any tax increases on businesses or higher-income Americans.
Only 17% of Americans believe that their elected officials have behaved like "responsible adults" during the debt ceiling debate, while 77% believe they have acted like "spoiled children."
"I think all of us need to reflect on how these institutions are conducting themselves, how members are conducting themselves," said Sen. Kent Conrad, D-North Dakota, who has announced he is not seeking re-election next year. "We need to think about why are we really here. We're here to solve problems. We're not here to worry about the next election, and unfortunately there's too much focus on pure partisan politics and not enough focus on solving problems confronting the country."
Well, when you think about it it is still a failure, the tax revenues that the country needed didn't go through with the deal, so now it seems that the poor will continue to pay full taxes while the rich still seem to prosper. Obama went on and on about the revenues and now he couldn't get them so yeah, the only thing that he wanted was the revenues, what the country needed was the debt ceiling raised.
I often don't have a rhyme or reason, only a rhythm.
If they think this is going to end the crisis completely than they're wrong. We still have a long ways to go before we can even think about the crisis ending. We need a global effort to avoid a global problem (which is what it is). One nation doesn't end this thing. The Congress and The President had no choice but to go with what they had at the moment. they knew that anything they had is probably better than defaulting.
I'm just glad our leaders are somewhat responsible enough to not let the nation default on its financial obligations. Beyond that, I'm fed up with this theatre act in which they play cat and mouse with each other at the taxpayer's expense.
If we're truly going to work to fix the problems and get out of the crises - we need to learn to truly work together and compromise. And then we need to look beyond our borders and to the rest of the world to strengthen the global economy.
"There is a sacredness in tears. They are not the mark of weakness, but of power. They speak more eloquently than ten thousand tongues. They are messengers of overwhelming grief...and unspeakable love."
- Washington Irving
What needs to happen is just to stop spending money on pointless shit. That'll solve a lot right there.
All they seem to do is spend spend spend. They never should have been spending so much in the first place, anyone with half a brain could figure out that much.
It won't fix anything, it's just delaying what they already set into motion.
God I hate the government so much. All they know how to do is spend taxpayer money and throw it around to useless and unnecessary things and people.
Doesn't really matter, if they keep acting like dumbasses then it'll never be fixed. And the government is a selfish and stupid entity. I doubt this'll do anything except delay what they started.
If you don't want to be in debt, don't spend so much. It's common fucking sense. If you don't want to clean up a mess, then don't make one.
Anyway, I'll just wait and see. Personally, I think it'll be funny if it all blows up in their faces and everything crashes and burns. Brutal, yes, but it might just smack some sense into people... although people are idiots, just look at who all they elected.
Shout, Shout, Let it all Out, These are the Things I Can do Without You Shouldn't Have to Jump for Joy, You Shouldn't Have to Shout for Joy
They Give You Life and in Return You Gave 'em Hell As Cold as Ice - No Bitch, You're Ice Ice Baby I Hope We Live to Tell the Tale, I Hope We Live to Shout the Tale
Will You Never Shout? And When You've Taken Down Your Guard... If I Could Change Your Mind, I'd Really Love to Break Your Heart! Come On Let Me Shout Shout Let Me, Come On Let Me Shout Shout!
All right, I hate government as much as the next guy, but you can't say one person is at fault. Also the government needs to spend money, and technically the government is always in debt it just depends how much, and at least they are trying to prevent a catastrophic collapse in this country like what just happened.
Yes the country is full of idiots, and yes the way they spend the taxpayers money is stupid, but the fact that most Republican officials stick completely to their idiotic ideals and won't tax the rich the people who should be taxed the most because then their money can be used much more and the underprivileged aren't responsible for paying all that much.
And that brings me back to how the tax revenues were not gained in the debt ceiling crisis ultimately determining the fact that Obama failed in his endeavor, but they had to take the deal, because idiotic Republicans and Tea Party members would have rather let the country default than let Obama tax their precious higher class.
I often don't have a rhyme or reason, only a rhythm.
^ The Republicans are not completely at fault here, bud. Look at the Democrats who sought to get their agenda through.
We needed a healthy dose of tax cuts and tax increases on all classes. We got the "acceptable" deal because that's all this President could push through. Why? Because Congress couldn't get its act together - because we've polarized the lines between the parties so much... to compromise is to show weakness. Apparently.
"There is a sacredness in tears. They are not the mark of weakness, but of power. They speak more eloquently than ten thousand tongues. They are messengers of overwhelming grief...and unspeakable love."
- Washington Irving
Well, in recent news... the Dow dropped 513 points today.
It fucking tanked. Looks like that didn't work. Guess I was wrong, it didn't delay the inevitable... it made it go faster.
Not only that but through the course of last week (I believe) it already dropped 700 points or so. So it's really dropped past 1000 points.
Personally speaking, my family narrowly avoided a fucking bloodbath with the stocks today.
Oh yes, brilliant idea.
Quote:
but the fact that most Republican officials stick completely to their idiotic ideals and won't tax the rich the people who should be taxed the most because then their money can be used much more and the underprivileged aren't responsible for paying all that much.
Hardly. If you tax them more then people would become discouraged to make more money in the first place. Then you won't have the money to go around. It's flawed logic.
Through a flat tax, everyone is taxed at the same percent. So it will encourage people to make more and wealthy people pay more anyway, there's no reason to tax a higher percent. Plus, who do you think gives out jobs to poor and middle class people? I've never had a poor person give me job before.
The wealthy will often have jobs that relate to other people getting jobs.
Why should people who've worked hard to get to where they are at be punished for it anyway? Rather than throwing money at people who sit on their asses and encouraging them to get paid for doing nothing, people should help them help themselves. Giving them money other people worked for wont do that. With that, you'd see a decrease in the wealthy and increase in the poor.
Simple positive and negative reinforcement.
Also the "underprivileged" don't pay much anyway. The wealthy already pay more as it is.
For the record, rich people shouldn't pay taxes at all. Why? Because if you become rich, you don't have to keep working. You can live off your earnings instead. If you tax people who don't work, they'll eventually have nothing.
Really, taxing the wealthy is just about equal distribution of misery. It's a far greater idea to help others help themselves. Giving them money simply for being poor is a horrible idea that encourages laziness. Ever hear of Jamestown? They tried equal distribution and they filed miserably and a bunch of people starved and died. Why? Because no body wanted to work because they all expected to get fed by the next person and expected them to do their work for them, because everyone was going to eat - so why should they work when others can do it for them? Then Smith was like "hell no, you don't work, you don't eat" and they fucking flourished. Cause and effect, that's all it is.
Shout, Shout, Let it all Out, These are the Things I Can do Without You Shouldn't Have to Jump for Joy, You Shouldn't Have to Shout for Joy
They Give You Life and in Return You Gave 'em Hell As Cold as Ice - No Bitch, You're Ice Ice Baby I Hope We Live to Tell the Tale, I Hope We Live to Shout the Tale
Will You Never Shout? And When You've Taken Down Your Guard... If I Could Change Your Mind, I'd Really Love to Break Your Heart! Come On Let Me Shout Shout Let Me, Come On Let Me Shout Shout!
Well maybe there's some way to increase the amount of tax that the higher-income earners get to balance it out so the poorer americans don't have to suffer in the same way because there's a long way to go before this is actually solved. I just hate the way that the tea party members tied everyone's hands because of their damned ideals and that they got away with it too.
Well maybe there's some way to increase the amount of tax that the higher-income earners get to balance it out so the poorer americans don't have to suffer in the same way because there's a long way to go before this is actually solved. I just hate the way that the tea party members tied everyone's hands because of their damned ideals and that they got away with it too.
If you tax the higher brackets, it won't make the suffering of the poor any less. One of the better ways to lessen the plight of the poor is to create jobs so more people can make the jump to middle class. (Unless you believe that culture of poverty stuff that Oscar Lewis put out) Taxing the rich doesn't help with jobs. Either does taxing the poor. Taxing is not a way to end the plight of poor people.
You might not like their ideals but every once and a while America needs a grassroots movement in politics. The tea party plays and will play a big role in the political scene. They didn't tie any hands themselves. The only reason they exist is because of popular sentiment and frustration that's rooted in the everyday voter of the USA. So if you're going to blame someone. it has to be the voters.
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CNN: Obama signs - To end crisis?
