THE SIX-MONTH-long crisis over US debt ended yesterday when President Barack Obama signed into law a Bill raising the debt ceiling by $900 billion, just hours before the US would have defaulted on its $14.3 trillion debt.
There was little enthusiasm for the deal among US congressmen. The Senate nonetheless passed the Bill by a vote of 74 to 26 shortly after noon yesterday. The House of Representatives had endorsed it by 269 to 161 votes on Monday evening.
“Although you may not see it this way, you’ve actually won this debate,” Senator Mitch McConnell, the leading Republican in the upper chamber, told Tea Party conservatives. Alluding to unprecedented legal linkage between government borrowing and spending cuts, Mr McConnell said there was henceforward “a new way of doing business in Washington”.
Speaking for Democrats, Senate majority leader Harry Reid said most Americans “think the arrangement we’ve just done is unfair, because the richest of the rich have contributed nothing”. The Tea Party’s hold on Congress “has been very, very disconcerting”, Mr Reid said.
Before he signed the Bill, Mr Obama reviewed what he called “a long and contentious debate” in remarks in the Rose Garden. The president, who will celebrate his 50th birthday in his home town of Chicago today, appeared to have rebounded with the end of the debt crisis.
In the course of a combative eight-minute speech, Mr Obama defended the debt deal as “an important step to ensuring that as a nation we live within our means” and returned to his insistence – twice abandoned in negotiations with Republicans – that “the wealthiest Americans and biggest corporations pay their fair share”. The US must “get rid of taxpayer subsidies to oil and gas companies, and tax loopholes that help billionaires pay a lower tax rate than teachers and nurses,” he said.
To the consternation of Republicans, Democrats claim tax rises will be “back on the table” in negotiations by a special committee established to carry out provisions in the new Bill.
“We can’t balance the budget on the backs of the very people who have borne the biggest brunt of this recession,” Mr Obama said. “Everyone is going to have to chip in. It’s only fair. That’s the principle I’ll be fighting for during the next phase of this process.”
The next phase will be passage of another “continuing resolution”, or a 2012 budget, when the current resolution expires next month. There is certain to be further debate over government spending before the special committee delivers its findings on November 23rd, and before Congress votes on those findings by December 23rd. Republicans seem determined to monopolise the remainder of Mr Obama’s first term with the issue.
Mr Obama railed again the obsession with spending cuts yesterday, saying “new jobs, higher wages and faster economic growth” were “what the American people care most about”. When Congress returns from its holiday recess in September, he wants it to vote to extend tax cuts to middle class families, prolong unemployment benefits, “cut the red tape” in the patenting process and ratify trade deals with Asia and South America to enable the US to export more goods.
He called for an infrastructure bank to lend money to private companies hiring jobless construction workers “to repair our roads and bridges and airports”. Opinion polls show a hostile response to the debt crisis. Three-quarters of Americans questioned by Washington Post-ABC News pollsters used negative words to describe the debate, the top words being “ridiculous” and “disgusting”. Fifty-two per cent of respondents in a CNN/ORC poll disapproved of the debt-ceiling deal, and 77 per cent said elected officials behaved like “spoiled children”.
Mr Obama seemed to tap into this vein of dissatisfaction when he condemned the “manufactured crisis”. It showed, he said, “that Washington has the ability to focus when ... there’s a looming disaster. It shouldn’t take the risk of default – the risk of economic catastrophe – to get folks in this town to work together and do their jobs. Because there’s already a quiet crisis going on in the lives of a lot of families, in a lot of communities, all across the country.”