President Barack Obama has signed legislation Tuesday to raise the U.S. debt ceiling, averting a potential government default only hours before the deadline. The president called the bill an important first step toward fiscal responsibility.
The president's signature on the legislation defuses what might have been a far-reaching crisis for the U.S. economy.
Minutes after the Senate passed the bill by a of vote of 74 to 26, Obama told reporters at the White House that the process of reducing the government's deficit has begun.
"This compromise guarantees more than $2 trillion in deficit reduction," said Obama. "It is an important first step to insuring that, as a nation, we live within our means."
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The new law immediately allowed the Treasury to borrow an additional $400 billion, with more borrowing allowed later. It is also intended to reduce the nation's $14.3 trillion deficit by at least $2.1 trillion over 10 years. The House of Representatives passed the bill on Monday by a vote of 269 to 161, after weeks of intense debate.
Under the bill, a bipartisan committee in Congress will work to find further savings in federal budgets.
The president said the agreement requires that both major political parties work together on a larger plan to cut the federal budget deficit, which he said is important for the long-term health of the U.S. economy.
Obama said that plan would need to include cuts to social programs, a move that many Democrats oppose, and higher taxes, which many Republicans reject. Neither option was included in the compromise legislation.
"Yes, that means making some adjustments to protect health care programs like Medicare, so they are there for future generations," Obama added. "It also means reforming our tax code, so that the wealthiest Americans and biggest corporations pay their fair share."
In addition, lawmakers will also consider a constitutional amendment requiring the government to balance its budget.
Republican Senator John Barrasso said such an amendment would prevent another debt crisis.
"The question is, 'Are we going to be living by the same rules that apply to every family, every small business and 49 states, which is, that they cannot spend more money than they have?'" asked Barrasso.
Obama angrily denounced lawmakers for allowing the debt debate to linger until hours before the default deadline. He said a "manufactured crisis" in Washington has hurt the struggling U.S. economy.
"That was in our hands," Obama said. "It is 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."
The president said it should not take the risk of "economic catastrophe" to force lawmakers to work together and do their jobs. He said the priority now is for Democrats and Republicans to focus on creating jobs and reviving the U.S. economy.
The top House Democrat, Minority Leader Nancy Pelosi, agreed that lawmakers must immediately turn their attention to economic recovery.
"Yesterday we crossed a bridge," said Pelosi. "Enough talk about the debt. We have to talk about jobs."
Obama called on Congress to pass numerous bills that he said would strengthen the economy, including approving free trade agreements with Colombia, Panama and South Korea.