Senate passes debt limit extension
The Senate approved a deal to raise the debt ceiling and trim government spending 74-26 Tuesday. The House passed the compromise between the White House, Republican and Democrat leaders in Congress Monday. The agreement comes in the final moments of an Aug. 2 deadline set by the Treasury Department weeks ago. President Obama signed the bill Tuesday afternoon. The deal would allow an initial increase to the debt limit by $400 billion and provide two more steps needed for raising the ceiling by between $2.1 trillion and $2.4 trillion, according to the Congressional Budget Office. The bill would cut an initial $917 billion in government spending between 2012 and 2021 and establishes a special committee to seek at least $1.5 trillion in additional savings over the next 10 years. If Congress does not approve the committee's proposal, automatic triggers would slash $1.2 trillion in spending. Obama said Tuesday that everything will be on the table when the committee convenes, including the possibility of new tax revenues by increasing rates on the wealthy and closing loopholes for corporations. "This is just the first step. It requires both parties work together on a larger plan to cut the deficit," Obama said. "You can't cut the deficit with just spending cuts, so everything is on the table." Fitch Ratings called the deal a good first step and said it commensurates with a U.S. triple-A rating. The credit rating agency added that despite the dramatics in Washington over the previous weeks "there is the political will and capacity to ultimately do the right thing." "The agreement is an important first step but not the end of the process towards putting in place a credible plan to reduce the budget deficit to a level that would secure the United States' 'AAA' status over the medium-term," Fitch said. Write to Jon Prior. Follow him on Twitter @JonAPrior.