US & Canada

Senate votes on US debt deal as deadline looms

Media playback is unsupported on your device
Media captionCongresswoman Gabrielle Giffords received a warm welcome in the House of Representatives

The US Senate is voting on a bill to raise the nation's debt limit, one day after the House of Representatives backed it and hours before a deadline.

Monday's vote in the House appears to have averted the prospect of the first full-scale US federal debt default.

Members of the 100-seat Senate debated the legislation on Tuesday morning. If approved, it will be signed into law by President Barack Obama.

The deal ties a $2.4tn (£1.5tn) debt increase to spending cuts.

The Senate vote is taking place barely 12 hours before Washington is due - according to the US treasury department - to cease to be able to meet all its bills.

Senators began discussions about the legislation early on Tuesday.

Prior to the vote in the Senate, Republican leader Mitch McConnell praised the direction of the legislation, saying "Congress engaged in an important debate" over the past several weeks.

"The push-and-pull people saw in Washington this week was not gridlock, it was the will of the people working itself out," Mr McConnell said.

"Together, we have a new way of doing business in Washington," he added.

Senate Majority Leader Harry Reid spoke after Mr McConnell, saying that though debt deal was not perfect, the US needed to avert the financial disaster that would have been caused by a default.

The bill has the backing of Republican and Democratic leaders in the Senate and is thought likely to win the support of the 60 senators it needs to pass.

In the House on Monday evening the bill passed by a clear margin of 269 votes to 161.

Despite ongoing reservations about how the bill would fare with conservative members of the House, the bill won the backing of 175 Republicans, with 66 voting against.

Democrats were more evenly split - 95 for and 95 against.

The vote was notable for the reappearance in the House of Congresswoman Gabrielle Giffords for the first time since she was shot in the head in Tucson, Arizona in January.

Ms Giffords - who has undergone a number of operations - caught lawmakers by surprise when she appeared on the floor of the House on Monday evening.

There was a standing ovation and embraces for the Democratic representative, who voted in favour of raising the debt ceiling.

Triggers in place

The deal, hammered out over the weekend after weeks of feverish speculation, raises the debt limit by up to $2.4tn (£1.5tn) from $14.3tn, and makes savings of at least $2.1tn in 10 years.

In a key point for President Obama, the bill would raise the debt ceiling into 2013 - meaning he would not face another congressional showdown on spending in the middle of his re-election campaign next year.

The compromise deal deeply angered both right-wing Republicans and left-wing Democrats.

Liberals have been unhappy that the plan relies on spending cuts only and does not include tax rises, although Mr Obama could still let Bush-era tax cuts for the top brackets expire in January 2013.

House Republicans were displeased that the bill did not include more savings.

Announcing the deal on Sunday evening, President Obama said that, though it was not the one he would have preferred, it was a "serious down-payment" on the US deficit.

The deal would enact more than $900bn in cuts over the next 10 years.

It would also establish a 12-member House-Senate committee charged with producing up to $1.5tn of additional deficit cuts over a decade.

If the panel failed to produce at least $1.2tn in deficit savings, spending cuts would take effect across much of the federal budget.

The Pentagon would be among those areas affected, but in a concession to Democrats, individual benefits under Social Security, Medicaid and Medicare would be exempt.

The legislation also requires the House and Senate to vote on an amendment to the Constitution, forcing the US to balance its budget.

The political stalemate has unsettled financial markets, endangered Washington's coveted triple-A credit status, and exasperated Americans still grappling with unemployment of 9.2%.

More on this story