The US Congress is preparing to vote on a deal struck between the White House and party leaders that would end weeks of uncertainty and avoid a default.
Sunday's deal would raise the debt ceiling by up to $2.4tn - from $14.3tn - and would make budget savings worth a similar amount over 10 years.
A new bipartisan commission will allocate $1.5tn of those savings.
The deal needs to pass both houses of Congress to become law, and elements of both parties are expected to oppose it.
Republican and Democratic leaders in the House of Representatives and the Senate are now attempting to convince their own party members of the merits of the bipartisan deal.
However, the BBC's Jane O'Brien says the package is still likely to be a tough sell, with some Republicans and Democrats in the House remaining opposed to different aspects.
The markets responded to the breakthrough with relief. The Dow Jones index in New York gained nearly 1% soon after opening, following gains in Tokyo and London - though they later lost ground after poor economic news from the US.
The proposed deal calls for:
- A debt ceiling increase of up to $2.4tn - enough to last past the 2012 presidential election
- Government spending cuts of $900bn, split between defence and non-defence spending
- Bipartisan congressional "super-committee" to recommend $1.5tn of further spending cuts, spread out over 10 years, reporting by November
- Cuts to key spending areas, including education and defence spending, to be enacted automatically if committee fails to reach a deal
- Committee findings would also be put to a vote in Congress
The latest US media reports indicate that the House of Representatives would begin voting on the debt plan early on Monday evening, while the Senate would not likely vote until Tuesday.
'Typical compromise legislation'
The most intense debate on the deal is likely to come in the House, where the divisions are most pronounced.
Analysis
There is plenty about the plan for everyone to dislike.
The president has not been able to get Republicans to agree to tax increases, even though this will be one of the many issues on the table when a special congressional committee meets to discuss government spending. The Republicans have had to agree to a longer extension of the debt ceiling than they wanted.
This has been a profoundly messy process which has rattled the markets and further eroded public faith in the ability of Congress to deal with the country's problems.
The agreement, if it passes, helps to stop the rot but the underlying debates about the size and function of government rage on.
Newly elected Republicans have consistently refused to compromise in the debate over the debt ceiling, with many insisting on deep and immediate spending cuts and a constitutional amendment to force the US to balance its budget.
Many Democrats, meanwhile, strongly oppose the prospect of cuts to social programmes, benefits and health care for the elderly or lower-paid.
Analysts say there is more consensus in the Senate.
Democratic Majority Leader Harry Reid and Republican Senate leader Mitch McConnell were two of those pushing the plan and they are thought likely to be able to corral their troops to approve the deal. The Senate bill needs a 60-vote bipartisan "supermajority" to pass.
In the Senate on Monday, Mr Reid called the deal a "remarkable agreement".
He later said that though "neither side got what they wanted", the deal was "typical for compromise legislation".
In the House, Democratic leader Nancy Pelosi is expected to ensure enough Democrats vote for the bill to help smooth its passage, analysts say.
In the 436-seat House the Republicans hold 240 seats, a clear majority. But a number of hard-line fiscal conservatives and Tea Party representatives are likely to vote against, ensuring a measure of Democratic support is needed to pass the deal.
No comments:
Post a Comment