Obama signs US debt bill

Congress votes in favour of A Bipartisan Compromise Deal

Washington: US President Barack Obama on Tuesday signed an emergency austerity bill that averted a
devastating debt default, but warned the contentious plan was just the first step on a long road to economic recovery. Its an important first step to ensuring that, as a nation, we live within our means, Obama said in the white House Rose Garden after polarized lawmakers sent him the legislation.This is, however, just the first step. The measure lifts cash strapped Washingtons $14.3 trillion debt limit by up to $2.4 trillion while cutting at least $2.1 trillion in government spending over 10 years , a step forecast to drag down already sluggish US growth. Slowing down the big government freight train from its current trajectory will gives us the time we need to work toward a real solution, said Republican senate minority leader Mitch Mc Connell. Obama spoke after the US senate voted 74.26 to pass the measure which cleared the House of Representatives by an overwhelming 269.161 margin on Monday with just hours to spare before a midnight deadline that could have triggered a first-ever US default on its debt payments. Congressional approval paid immediate dividends as the Fitch ratings agency said the hard-fought 11th hour compromise would spare Washington from losing from its sterling Triple-A debt rating. A down grade would have likely led to a spike in US interest rates, making debt payments more pricey and hurting Americans holding flexible-rate loans anyone carrying credo=it-card debt, or seeking an automobile loan. But Fitch said it would keep a close eye on the countrys long-term finances and pressed for a credible multi-year deficit reduction plan if Washington is to stay in the elite club of healthy, low-risk debtor economies. Obamas 2012 reelection bid will turn on voters perceptions of his handling of the US economy, which has laboured under historically high unemployment above nine per cent as it struggles to recover from the global melt-down of 2008. The president promised that the deficit-cutting would not starve education and research nor happen too abruptly while the economy is still fragile and railed against the manufactured crisis over the debt limit.

Republicans have promised that the spending cuts will create jobs, but top Wall Street economists have warned the austerity measures will actually be a dragon already sluggish US growth even as government stimulus measures run out. The overall shift from priming the US economy to government belt-tightening is expected to reduce US growth next year by about 1.5 percentage points, according to JPMorgan Chase economists.

AVERTS DEFAULT
The bill cleared its final hurdle in the senate by 74 votes to 26. The legislation was passed in the house of Representatives by a clear majority on---Monday evening. The law raises the debt limit by up to $2.4tn from $14.3tn, and makes savings of at least $2.1tn in 10 years. The deal was struck after negotiations between Republicans, Democrats and the White House went down to the wire. The signing of the law came roughly 10 hours before Washington was due o run out of time. With out a deal to raise the debt ceiling, the US would have been unable to meet all its bills. The President said more action was needed, saying it was impossible for the US to close the deficit with just spending cuts. He urged congress to now look to boost the economy through measures to create jobs and increase consumer confidence.

Gabrielle Giffords:
2006: First elected in 2006 to represent 8th district of Arizona. January 8, 2011: Shot in head at a constituency event in Tuscon,Arizona. Six others killed. Jared Lee Loughner, 21, charged over shooting. March: Said to be stringing sentences together and walking.. May 16: Watches astronaut husband Mark Kelly launch Endeavour. May 18: Has portion of skull replaced with ceramic implant. May 25: Loughner found incompetent to stand trial. June 2011: Giffords discharged from hospital.