17 October 2013 Last updated at 00:12 ET

As it happened: US debt deal

Key Points

  • The US Senate and House of Representatives passed a last-gasp, cross-party deal to raise the debt limit and reopen the government
  • Before signing the bill into law, President Barack Obama said: 'We've got to get out of the habit of governing by crisis'
  • The US had to raise its $16.7tn (£10.5tn) debt limit by Thursday or risk default - All times Eastern US (GMT -4)

    Welcome to our live page, which will bring you the latest updates as the US tries frantically to avoid a default on its debt.

    Congress has one last day to hammer out a deal to raise the borrowing limit before it risks default on its debt. Experts have warned that failure to pay its bills could have dire economic consequences around the globe.


    A lot happened - and didn't happen - on Tuesday, when the Republican-controlled House of Representatives tried and failed to find enough support among its members for its proposal to end the crisis.


    That means the action today pivots back to the other house in Congress, the Senate, where leaders worked through the night to craft a deal. A spokesman for the Democratic majority leader, Harry Reid, said Mr Reid was "optimistic" an agreement was within reach.

    Ted Cruz

    If they do hatch a plan in the Senate, it could then be sent to the House of Representatives, which has repeatedly tried to exact concessions in relation to President Obama's signature healthcare law, a strategy led by Republican Senator Ted Cruz of Texas, above.


    As the showdown enters its apparent endgame, liberal-leaning Daily Beast columnist Michael Tomasky describes the situation as "a sad and sickening spectacle, like nothing I've ever seen in my life.

    "Not as bad as Watergate, you say? I beg to differ."

    0854: BBC News website readers comments

    You have been commenting on the BBC story. Charlie1902 writes: The states could repay their debt and probably quicker than most people would think if the two parties would just negotiate lowering some spending WITH raising some taxes. swerdna says: No family, business or country can continue operating if expenses continue to exceed income.


    The plan in the Senate would reportedly extend the federal borrowing limit until 7 February and fund the government to mid-January, and would include relatively minor changes to Mr Obama's signature healthcare law.


    The twin political crises of the debt limit and government shutdown have played poorly for the Republican Party, with polls suggesting Americans are placing most of the blame for the mess on them.

    Now, pollster Stuart Rothenberg sees evidence a Democratic wave is ahead in the 2014 midterm congressional elections.

    "One thing that now appears incontestable is that [Republican] Texas Sen. Ted Cruz has damaged his party badly in the short term, making the GOP [Republicans Party] look extreme, confused, unreasonable and unappealing."


    Large swathes of the US government have been closed for more than two weeks because of the same budget dispute, so any deal will aim to get all agencies of the federal government working again. Here's the shutdown explained.

    0906: Political analyst Taegan Goddard

    tweets: If deal gets done today, watch Obama praise McConnell for taking on the right wing… It won't be very helpful in McConnell's primary.

    0908: Rajini Vaidyanathan, BBC News, Washington

    tweets: Any deal brokered in Senate/House likely to fund govt/raise debt ceiling for limited time only. Expect a rereun of this saga in a few months?

    US Capitol

    This is an image that currently elicits rage and frustration among Americans. The continuing dispute has seen Congress' approval ratings - never soaring in recent years - plummet to a dismal 5%.

    0918: Laura Trevelyan BBC News, New York

    Congressman Jim Renacci, a Republican from Ohio, tells me live on BBC World that it's time to end the uncertainty for the American people.

    0925: Mark Mardell BBC North America editor

    The Senate is working on a plan, but they are running out of time. How the House will react to any deal is uncertain. But I bet they embarrass themselves in the process.

    Read the full article in Mark's blog


    Timings of debate today - the House meets at 10:00 local time (14:00 GMT) and the Senate at noon (16:00 GMT). That doesn't leave a lot of time to meet the midnight deadline.


    In Salon, Brian Beutler writes: "With the Treasury Department scheduled to run out of room under the debt ceiling this week, House Republicans decided that a good thing to do would be to waste all of Tuesday.

    "That's literally what they did."

    0933: Alex Halaska, in Urbana, Illinois

    tweets: The debt ceiling being this close makes me feel like a citizen of Gotham, watching the Joker preparing to absolutely annihilate everything.


    All eyes will be on the markets today to see how they respond to the continued uncertainty. Here is an explainer that tells you why.


    There would also be significant domestic consequences if the US suddenly can't pay its bills. Here's what might happen, in a nifty, 90-second video.


    Not everyone is predicting financial Armageddon. The world's biggest money manager BlackRock has said investors were showing "no signs of stress at all" over the approaching deadline for US default.

    Chief investment strategist at BlackRock, Ewen Cameron Watt, told the BBC that US growth would be under threat from default, but the effect on US bonds held the world over might not be as cataclysmic as people feared.


    Democratic Senator Barbara Mikulski has warned her colleagues that the US was "hours away from becoming a deadbeat nation, not paying its bills to its own people and other creditors".


    Republican Congressman Steve King told CNN a few moments ago that Thursday's deadline to avoid default is nothing more than a date "picked on a calendar". That's a view shared by several in his party. He also said he is likely to disagree with - and vote against - any bill that comes from the Senate today.

    0954: Robert Costa of the National Review

    tweets: Per Sen sources, Boehner has agreed to take up the Senate's plan and allow it to pass with Dem votes.


    The US government's AAA rating has been put on warning - the Fitch credit agency says it could downgrade. Standard & Poor downgraded the US in 2011, a historic first. So what do downgrades mean and what do these agencies actually do? Here's an explainer.


    CNN's Wolf Blitzer looks over the Senate deal and notes, "In January and February, we may be going through this one more time."

    Prayers at Capitol

    There were prayers at dawn in front of the US Capitol, where ministers belonging to a Christian group called The Circle of Protection gathered to draw attention to what they see as political divisiveness hurting the most vulnerable.


    Stocks have risen in early trading on US markets as traders hope for a last-minute deal. The Dow Jones Industrial Average was up 173 points - 1.14% - while the broader S&P 500 index was up 41 points, 1%.


    News just in - the House of Representatives is to vote first on the Senate plan. Just to remind you - this would extend the federal borrowing limit until 7 February and reopen the government to mid-January, and make minor changes to Mr Obama's signature healthcare law.


    Billionaire investor Warren Buffett has told CNBC the budget wrangle is a "political weapon of mass destruction". He said: "I know it's been used in the past, but we used the atomic bomb back in 1945 but we decided we weren't going to do something like that again."


    Before the House can vote, Senate leaders are finalising the bill. It's significant that it goes through the House first because it speeds up the process. If the House passes the bill first and sends it to the Senate, then some procedural hurdles are eliminated and this paves the way for final passage in the upper house. A senior Democrat told the New York Times the bill could be signed off by the president before the end of the day. History suggests it may not be that smooth.

    1057: Ezra Klein, Washington Post

    tweets: American politics has become a game of Calvinball played with live ammunition

    Read his column


    Republican Senator Kelly Ayotte has told the Associated Press that Senate leaders have come to an agreement on how to avert default and lift the shutdown.

    She made the comments as she went into a meeting of Senate Republicans in which they will discuss the deal hatched by Senate majority leader Harry Reid and the Republican leader in the Senate, Mitch McConnell.


    Sources in the US Capitol are also telling Fox News that the Senate deal is finalised and an announcement on the details could be forthcoming.

    1113: Suzanne Kianpour, BBC News, Capitol Hill

    tweets: Sen Cruz heading into McConnell office for GOP meeting wouldn't answer Qs. Asked if had plans to use delay tactics, said nothing

    1119: Rajini Vaidyanathan, BBC News, Washington

    tweets: Having been off for the past week, a lot of non beltway folk asked why politicians let it get to this? Good question.


    "The name of the game is to devise an approach that's acceptable to Obama and can get some Republican votes," writes Matthew Yglesias in Slate.

    1128: Dana Bash, CNN

    tweets: so when will this deal be announced? i'm told may be paper statement but more likely senate leaders will announce on floor at noon


    Democratic Congressman Peter Defazio of Oregon caused some laughter during a hearing in the House of Representatives on the closure of the national parks. Holding up a mirror towards his Republican colleagues, he said: "I will show you who's responsible. Right here. Here you are."


    Reuters is now reporting that leaders of the House of Representatives have yet to decide whether they will vote first on the Senate measure to raise the debt limit and reopen government, quoting two sources on Capitol Hill.

    1151: Suzanne Kianpour, BBC News, Capitol Hill

    US media are reporting the House will vote first, but a House Republican leadership aide tells the BBC they are not confirming that. No decision has yet been made.

    Ambulance in front of Congress

    Emergency at Congress?


    The Senate has opened and details on a deal are expected to be announced shortly.


    The two men who have hatched this deal, Mr Reid and Mr McConnell, are hugely experienced politicians, but they are not close friends, it has been widely reported.


    Majority Leader, Senator Harry Reid, has made some opening remarks. He's waiting for the Minority Leader, Senator Mitch McConnell, to arrive before announcing the details.


    Karl Rove, former political adviser to President George W Bush and an influential voice on the right, tells Fox News that his party made a mistake pursuing the "defund Obamacare" strategy and will end up with nothing to show for it. The country realised this was a failed tactic, he adds.


    It's worth reminding readers why the healthcare law, known as Obamacare, is so divisive. Many Republicans are deeply opposed to this law, which aims to extend health insurance to all Americans, because they say the public disapprove of it, it will cost jobs and it will be hugely expensive. They also oppose the principle of the government compelling people to have health insurance. A key provision of the law was rolled out two weeks ago, as the shutdown got under way.


    The government would be funded until 15 January and the debt ceiling raised until 7 February, under the terms of this deal, Majority Leader Harry Reid tells the Senate.


    A budget conference committee would be set up to discuss future spending, Mr Reid announced.


    Senator Ted Cruz, a fierce opponent of Obamacare, has said he won't block this bill.


    Other senators are now speaking on the floor.

    1230: Ron Fournier, National Journal

    tweets: Our long national nightmare has ... been punted.


    What happens now is unclear. We don't know yet whether the Senate or the Republican-controlled House of Representatives will vote first. CNN's Dana Bash says it's "probable" the Senate will vote first.


    If the bill passes both houses of Congress, it would then have to be signed off by President Barack Obama.


    "We're going to get back to work, solving the fiscal issues of our country," says Democratic Senator Barbara Mikulski, who heads the Senate committee that authorises spending.

    Rajini Vaidyanathan, BBC News, Washington

    tweets: Repub Sen McConnell is "confident" shutdown and borrowing limit will be sorted today. Still depends on votes passing both House and Senate.

    Protest at Congress

    Protesters have made their voices heard outside Congress.

    1257: Suzanne Kianpour, BBC News, Capitol Hill

    Senate Republican leadership aides tell the BBC it looks likely the Senate would vote on the debt ceiling deal before the House - around dinner time tonight. As of now no vote set.


    President Obama applauds the efforts of Mr Reid and Mr McConnell in hatching a deal, his spokesman tells reporters.

    Sabrina Siddiqui, Huffington Post

    tweets: Sen Orrin Hatch: "I just feel badly about the way the Speaker of the House has been treated... by members of his own party."

    1307: Robert Costa, National Review

    tweets: A close friend to Cruz tells me Cruz is looking ahead now, very disappointed w/ leadership, but gearing up for fights tmw, not today


    An article on the Lawfare blog says the debt ceiling is a national security issue.


    The deal could mean an end to the across-the-board annual spending cuts known as the sequester, if - and this is a big if, given recent history - the budget committee can agree a long-term plan.


    White House spokesman Jay Carney has just been speaking about this very subject. He said the president believes these across-the-board cuts are done by a cleaver rather than a scalpel and do harm to the economy - better to come together and work out where to cut and where to invest.

    Ted Cruz in Congress

    This gives you a sense of the mayhem in the US Capitol buildings today. Senator Ted Cruz is centre of attention as he says he won't block the deal.


    "Although there is many a slip between the cup and the lip, I think we're in the home stretch." A nicely expressed note of caution (with metaphors mixed) from Democratic Senator Dianne Feinstein.


    The headline on the Politico website front page says it all.


    The Dow Jones Industrial Average soared throughout the morning, making a 177-point gain, or 1.2%, on the back of the news that the threat of a US default was receding.


    The Republican who helped to hatch the plan, Minority Leader Mitch McConnell, has given his reaction, saying it's been a "long, challenging few weeks". Watch his response here.

    1423: Escherm Scherm

    posts on Facebook: What a waste of taxpayers' time and money. And since one side felt so adamant, I am surprised they caved in. I guess we'll see the new dramas as they unfold

    1425: Major Garrett, Chief White House correspondent, CBS News

    tweets: Senate will vote first on bi-partisan DL & CR deal. Timing late afternoon/early evening. Unless it isn't. #SlipperySchedule


    A lot has been written in recent weeks about the divisions within the Republican Party. This piece in Salon suggests it was the former senator, Jim DeMint, a hugely influential voice within the Tea Party, who torpedoed Republican leader John Boehner's best-laid plans on Tuesday.


    America's international image has been significantly affected, says IM Destler, professor at the school of public policy at the University of Maryland.

    How long and how durable this is depends on how the US emerges from it, he told BBC Mundo's Thomas Sparrow. "For the time being, anyway, it is a significant blow and I personally feel ashamed of how our government is behaving."

    John Cornyn

    It was a busy day on Capitol Hill for Republican Senate Whip John Cornyn of Texas.

    1452: Connecticut Democratic Senator Chris Murphy

    tweets: Little reason for celebration. Keeping doors open, paying bills is not a victory, it should be a basic expectation of gov.

    1501: Suzanne Kianpour, BBC News, Capitol Hill

    The Senate deal is a bad one for the American people, Michele Bachmann has told the BBC. "It's a full-on win for the Obama agenda, which is hurting jobs, hurting the economy and that's going to continue."


    Time to recap where we are. A cross-party deal has been put together by the US Senate that would lift the debt ceiling and reopen those parts of the government that have been shut due to this prolonged budget dispute.


    The deal, which has the backing of President Obama, would fund the government until 15 January and lift the borrowing limit until 7 February.


    A third element to the deal would be a budget committee made up of House and Senate negotiators from both parties aiming to reach agreement on a long-term spending and tax plan by 13 December.


    Republican senators have indicated they will not block the deal and it's expected - although not certain - that the Senate could vote first on the bill.


    House Speaker John Boehner has told his party to support this deal. "Blocking the bipartisan agreement reached today by the members of the Senate will not be a tactic for us," he said in a statement.

    John Boehner

    The fight against Obamacare will continue, Mr Boehner added.

    BBC News US

    tweets: "Rank and file congressmen/women tell us Speaker Boehner got a standing ovation in the House GOP meeting." - BBC's @KianpourWorld


    The US Chamber of Commerce has urged Congress to vote yes to the deal, Reuters reports.


    You can read Speaker John Boehner's statement in full on his website.

    1604: Suzanne Kianpour, BBC News, Capitol Hill

    House Republican leadership aide tells me the chamber plans to vote on Senate deal to open govt and raise debt ceiling around 11pm local time (0300 GMT).

    R England, Fayetteville, US

    So after weeks of political posturing that has caused serious harm to the national economy, all of a sudden it's fixed? On my end it has failed. If you are in DC now, you will not get my vote ever again. You have proven you either cannot, or will not do your job.


    A silver lining in the crisis, says a senior Democrat, Senator Chuck Schumer, is that mainstream Republicans realise the politics of confrontation doesn't work. He denied his own party had contributed to the conflict by taking a hard line.

    Mark Mardell BBC North America editor

    The assumption is that House Republicans will swallow their pride and abandon their stand without anything much in return.

    Read the full article in Mark's blog.


    If you've just joined us, you can get a full summary of the day's developments in our main news story.

    Matthew Dalton, Wall Street Journal

    tweets: Looks like it's time to dial back your Shutdownfreude, Europe, and deal with your own crappy economy and dysfunctional politics.


    Political brinkmanship in the US will have long-term consequences on its global influence, says Amadou Sy, senior fellow at Brookings. "It gives countries such as the Brics and even African countries ammunition to ask for a greater voice in international institutions such as the World Bank and the IMF," he tells BBC Mundo's Thomas Sparrow.


    So if a deal is approved tonight, when might laid-off government workers return to their desks? Tomorrow? The Washington Post has an explainer.


    Ratings agency Standard and Poor's has estimated that 16 days of government shutdown has cost the US $24bn (£15bn) in lost economic activity. That figure is 0.6% of the US gross domestic product growth in the fourth quarter. "The bottom line is the government shutdown has hurt the US economy," S&P said in a press release.


    Senate senior aides tell the BBC they're estimating a vote on the debt bill will take place between 6pm and 8pm local time.


    The deal includes a tougher verification process for people receiving subsidies to buy health insurance. The Nation has an analysis on what impact this might have.


    Want to read the nitty-gritty of the US Senate deal? The online text of the amendment that senators will vote on shortly is up.


    At New York Magazine, Jonathan Chait highlights why an element of today's deal means the next debt-ceiling deadline might not be as harrowing:

    "Instead of needing Congress to approve a debt-ceiling increase, Congress has to override an Obama veto in order to prevent it," he explains. "That mechanism would utterly defang the debt ceiling, returning it to its historical place as an opportunity for ineffectual posturing rather than extortion. Alas, it only applies to the next debt-ceiling vote."

    Katty Kay Presenter, BBC World News

    tweets: "BBC World News America comes live from Capitol Hill tonight - with Congressman Peter King"

    Katty Kay with Rep Peter King 16 October 2013
    1813: Suzanne Kianpour, BBC News Washington

    House Republican aides say tonight's vote in the House is expected at 20:00 EDT (00:00 GMT Thursday).


    Buzzfeed, as usual, comes up with a previously unexplored angle. Having monitored the social media of the nation's politicians during the shutdown, it has 25 of the best and most random pictures, including fake beards, a pumpkin and the cast of Duck Dynasty.


    "The Republicans aren't the only ones who ought to hang their heads in shame," says Tim Stanley, writing in the UK's Daily Telegraph. "It was the Democrat-controlled Senate that first rejected the House's bill and so sparked the crisis."


    Grover Norquist, the president of The Americans for Tax Reform and a hugely influential voice among fiscal conservatives, has demanded an apology from the wing of his party that pushed to defund Obamacare. "I think if you make a mistake as big as what they did, you owe your fellow senators and congressmen a big apology," he told the National Review.

    US Capitol

    The consequences of what happens behind those walls over the next few hours will be felt across the globe.


    Senator Ted Cruz has just told the chamber that the deal to end the debt standoff is a "train wreck", as he vowed to continue his crusade against the law commonly known as Obamacare.


    "My pet fantasy, perhaps because I work for a British organisation, is that a small third party could gain enough votes in Congress and potential sway in presidential elections to force a new type of coalition building," writes the BBC's executive producer in the US, Dick Meyer, who asks, with more than one dollop of scepticism, whether Congress will learn its lesson.


    The international media is whipped up by the sense of crisis emanating from the Obama administration, says Helle Dale, senior fellow for public diplomacy at The Heritage Foundation. But the US has been through shutdowns and debt ceiling confrontations before and survived as a world power, she tells BBC Mundo's Thomas Sparrow.


    The Senate is now going through a procedural motion which, if it gets 60 votes, will go to a final passage of the bill.

    Michael Kraft in Montgomery, Alabama

    emails: I am happy that a limit has finally been agreed, even though it only funds the government until 15 January. However, I am disappointed that the Republicans have given up the fight against a national healthcare that no one here wants, as it is not affordable and is being forced upon the American people against their will.


    It's cleared the procedural vote so we are just waiting on the second vote, the passage of the bill through the Senate.


    The Senate has passed the bill to avert default and reopen the government. It will now go to the House of Representatives.


    The cross-party bill passed the Senate by 81 votes to 18.


    Senate Majority Leader Harry Reid says this was a manufactured and painful crisis. "We cannot make the same mistake again."


    Millions suffered because of this and faith in the United States was shaken, so this is not a happy day, it's a sombre day, says Democratic Senator Chuck Schumer.


    "If brinksmanship has peaked, if the kind of politics we have unfortunately seen over the past couple of years recedes... then maybe, these awful three weeks would have been worth it," adds Mr Schumer.


    President Obama is now speaking at the White House. He says he will sign the bill as soon as it arrives on his desk.


    The president thanks the leaders of all parties for getting this far but adds: "There's still a lot of work ahead of us, including winning back the trust of the American people that has been lost in the last couple of weeks."


    Mr Obama goes on: "We've got to get out of the habit of governing by crisis. My hope and expectation is everybody has learned there's no reason why we can't work on the issues at hand, why we can't disagree between the parties without still being agreeable and make sure that we're not inflicting harm on the American people when we do have disagreements."

    Benjy Sarlin, MSNBC political reporter

    tweets: Shouted question to Obama: "Is this going to happen all over again in a few months?" Obama: "No."

    President Barack Obama

    The president called on a new spirit of cross-party co-operation to solve the country's problems. "The Democrats don't have a monopoly on good ideas."


    People in Los Angeles have been telling the BBC what they think of the crisis. A clue - they're not happy. Watch what they have to say.

    Bryan Nolan in Sterling, Virginia

    emails: I am disappointed that no real agreement could be reached that would work to reduce the debt that is being increased at an exponential rate. I do not see how anyone can look at the amount of debt that is being incurred and say that we still need everything that is in the budget. The continued refusal to sit down and work out a solution is embarrassing.


    The House of Representatives has begun debating the bill. It's expected to take an hour before there's a vote.


    Treasury Secretary Jacob Lew said in a statement: "Because of today's efforts, we will continue to honour all of our commitments - a core American value - and preserve the full faith and credit of the United States."


    House Whip's office tells the BBC to expect a vote around 10pm local time (0200 GMT).


    Chinese state media, as seen by BBC Monitoring, are saying the US debt deal cannot undo the damage the stalemate has done to the US's reputation as a financial giant.


    "It is not the first time the US debt drama has been staged... this frequently staged drama may further hurt the US dollar as the international reserve currency's credibility," says The People's Daily.


    The House of Representatives has begun voting on the bill.

    2209: Breaking News

    Default has been averted and the US government can reopen after the House of Representatives passed a Senate bill that will now be signed off by the president.


    The bill will now go to the White House, where the president has said he will sign it off immediately.


    The votes are still being counted in the Republican-controlled House but enough Republicans have joined the Democrats to back the bill and get it over the line.


    The final vote count in the House was 285 for and 144 against.

    John R Stanton, Buzzfeed

    tweets: Ok, so we'll meet everyone back here January 15? Coming Soon To A Government Near You: Shutdown Fight Part 2

    Read his full article on Buzzfeed


    An official House stenographer was apparently pulled from the floor, after she suddenly went to the microphone and started to shout. Listen to what happened.


    The BBC's North America editor Mark Mardell says the crisis was a classic showdown worthy of any Western - but that everybody is still casting themselves as the good guys.


    Sylvia Mathews Burwell, Office of Management and Budget director, has released a statement saying President Obama plans to sign the legislation on Wednesday night, and that federal government employees should expect to return to work on Thursday morning.


    The Washington Post has a full breakdown of how each member of Congress voted.


    Members of the House of Representatives depart after their late-night vote.

    Members of the US House of Representatives depart after a late-night vote on fiscal legislation to end the government shutdown, at the U.S. Capitol in Washington, October 16, 2013

    The hometown newspaper of Republican Senator Ted Cruz of Texas, one of the chief architects of the impasse, has expressed its regrets for endorsing him a year ago, according to the Los Angeles Times.

    CNN Breaking News

    tweets: Yosemite National Park reopens tonight and visitors can return, park officials said.


    And that concludes our live coverage of the US debt deadlock. Thank you for joining us. You can keep up to speed with all the latest news via here on the BBC News website.


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