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August 01, 2011

US Senate Approves Debt Ceiling Bill

by Michael Bowman

After months of partisan gridlock, both houses of the U.S. Congress have approved a bill to raise the federal borrowing limit and cut government spending. Tuesday’s 74 - 26 Senate vote came one day after the bill passed in the House of Representatives. The bill goes to the White House to be signed into law by President Barack Obama, on the very day the U.S. government’s ability to cover its obligations was to expire.

U.S. Debt Deal Facts

  • It allows the debt ceiling to rise by up to $2.4 trillion - enough to keep the country borrowing money until 2013.
  • It includes spending cuts that could reach $2.5 trillion, to exceed the amount of the debt ceiling increase.
  • It initally cuts spending by at least $900 billion over 10 years, and creates a bipartisan budget committee to find additional deficit reduction of at least $1.5 trillion.
  • If the committee fails by late November to find additional ways to reduce the deficit, the failure would trigger automatic cuts across the government to take effect in 2013. Among them would be the first reduction in Defense Department spending in decades.
  • The deal does not include the Republicans' goal of requiring a balanced-budget amendment. It also leaves out the Democrats' plan to end some tax cuts for the wealth

Discontent

The Senate vote capped one of the most contentious legislative battles in recent history, one that laid bare deep philosophical differences between Democrats and Republicans as the U.S. government teetered on the edge of insolvency.

Rarely is legislation decried by supporters and opponents alike. Consider this comment by Democratic Senator Tom Udall of New Mexico, who voted for the bill:

“This deal stinks. And it stinks to high heaven,” Udall said.

Democrats blasted the bill for imposing deep spending cuts that could harm the poor and vulnerable without collecting any additional revenue from the affluent. Senator Carl Levin of Michigan said the bill’s only merit is that it averts, for now, the specter of default and financial calamity.

“The choice here is between a faulty piece of legislation, on the one hand, and severe damage to our economy and even-greater joblessness, on the other,” Levin said.


Many Republicans were equally critical, complaining that less than $3 trillion in budget savings over ten years is wholly inadequate for a nation facing a $14.3 trillion national debt.

“This so-called solution does not fundamentally change our spending and debt picture," said Senator David Vitter of Louisiana. "It just plays around the margins. It does not make any big change whatsoever.”

The best other Republicans could say is that the bill constitutes the initial round of a long fight to improve America’s finances. Senator Lamar Alexander of Tennessee put it this way:

“Today’s vote is an opportunity to take an important step in the right direction. We should take it, and then get ready to find ways to take the next step, and the next step, and the next," he said.

The bill

The bill mandates two rounds of federal spending cuts while providing a means to extend the federal borrowing limit through the end of next year. While satisfying Republican demands for no tax increases, it also specifies no cuts to costly programs championed by Democrats that provide income and health care for retirees.

Polls showed the American public angry and disillusioned by the partisanship and gridlock that consumed Washington for months before the eleventh-hour deal was struck.

What do people think?

On vacation in Washington, New Orleans city planner Nathan Schreuer was visiting the Capitol as lawmakers prepared to vote. Asked if his faith in America’s democratic process has been shaken by Washington’s political paralysis of recent months, Schreuer shook his head.

“No, I would say strengthened. I appreciate the fact that we continue to come together with different opinions and find solutions," Schreuer said. "It can always be done better. Democracy is far from perfect. It is a little sloppy.”

Nearby, a group of tourists from China was peering up at the Capitol’s majestic rotunda dome. One man, who declined to be identified, said creditor nations like China want to see America’s fiscal imbalances improve.

“I think this is correct. They [the United States] should save the money, instead of the [Afghan/Iraq] war. They should save the budget, to do education and business instead of other things,” the tourist said.

A woman in the group added that, by making sacrifices now, the United States can assure a better future.

“To suffer a little bit, but things are going to be better. I still think it [the United States] is a strong country,” she said.

Many U.S. lawmakers say preserving that strength during a time of fiscal austerity will be a primary challenge of the years to come.