US president Barack Obama and congressional Republicans face even bigger budget battles in the next two months after a hard-fought "fiscal cliff" deal narrowly averted devastating tax increases and spending cuts.
The agreement, approved late on Tuesday by the Republican-led House of Representatives and signed by Mr Obama yesterday, was a victory for the president, who had won re-election in November on a promise to address budget woes, partly by raising taxes on the wealthiest Americans.
But it set up potentially bruising showdowns over the next two months on spending cuts and an increase in the nation's limit on borrowing. Republicans, angry the fiscal cliff deal did little to curb the federal deficit, promised to use the debt-ceiling debate to win deep spending cuts next time.
Republicans believe they will have greater leverage over Mr Obama when they must consider raising the borrowing limit in February because failure to close a deal could mean a default on US debt or another downgrade in the US credit rating. A similar showdown in 2011 led to a credit downgrade.
"Our opportunity here is on the debt ceiling," Republican senator Pat Toomey of Pennsylvania said on MSNBC. "We Republicans need to be willing to tolerate a temporary, partial government shutdown, which is what that could mean."
But Mr Obama and congressional Democrats may be emboldened by winning the first round of fiscal fights when dozens of House Republicans buckled and voted for major tax hikes for the first time in two decades.
"We believe that passing this legislation greatly strengthens the president's hand in negotiations that come next," House minority leader Nancy Pelosi told NBC in an interview to air today. Mr Obama, who is on holidays in Hawaii, signed the legislation late yesterday, the White House said.
"We received the bill late this afternoon, and it was immediately processed. A copy was delivered to the president for review. He then directed the bill be signed by autopen," a senior administration official said. An autopen is an automatic pen with the president's signature.
Deteriorating relations between leaders in the two parties do not bode well for the more difficult fights ahead. US vice president Joe Biden and Republican senate leader Mitch McConnell had to step in to work out the final deal as the relationship between House speaker John Boehner and Mr Obama unraveled.
Senate majority leader Harry Reid also drew the ire of Mr Boehner, who told Mr Reid in the White House to "Go fuck yourself" after a tense meeting last week, aides said. His remark came after the Democrat accused Mr Boehner of running a "dictatorship" in the House.
Bemoaning the intensity of the fiscal cliff fight, Mr Obama urged "a little less drama" when the Congress and White House next address budget issues like the government's rapidly mounting $16 trillion debt load. He vowed to avoid another divisive debt-ceiling fight before the late-February deadline for raising the limit.
"While I will negotiate over many things, I will not have another debate with this Congress about whether or not they should pay the bills they have already racked up," Mr Obama said before he headed to Hawaii to resume an interrupted vacation.
Reuters
