The U.S. Senate voted Tuesday to settle the political battle over the country’s growing debt, passing a bill that will cut spending and raise the nation’s borrowing limit.
Senators approved the compromise measure, worked out by Republican leaders and President Barack Obama, less than 12 hours before the government ran out of money. President Barack Obama has said he will sign the bill into law.
The compromise allows the government to continue borrowing money through 2012 in exchange for spending cuts of almost $1 trillion over the next 10 years.
The package would also create a bipartisan budget committee that will seek up to another $1.5 trillion in deficit reduction. If the panel fails to reach an agreement, then the deal would trigger drastic spending cuts.
The Republican-led House of Representatives passed the bill Monday.
Before the Senate vote, Democratic Majority Leader Harry Reid said the legislation averts a disaster but criticized the bill because “the burden of what has taken place is on the middle class and the poor.” He criticized conservative Republicans with the Tea Party movement for preventing lawmakers from reaching a deal sooner
Republican Minority Leader Mitch McConnell said that getting to the compromise looked “messy.” But he also said it was just the “will of the people working itself out.” McConnell said while he is not satisfied with the cost-cutting measures in the bill, it is “a crucial step toward fiscal sanity.”
It is not clear if the deal contains enough spending cuts to avoid a downgraded credit rating.
In comments broadcast Tuesday, Treasury Secretary Timothy Geithner told ABC News he did not know what would happen to the country’s rating.
Geithner said the result of the compromise legislation was good but the process of getting to the compromise was “terrible.” He said the political wrangling shook the confidence of many Americans, saying their faith in the country was “absolutely very damaged by this spectacle.”
Geithner said that while the deal would help the country’s economy over the long-term, it does nothing to create jobs or spark immediate economic growth.
Standard & Poor’s credit rating agency had threatened to downgrade America’s AAA rating unless Congress passed at least $4 trillion in deficit cuts. A downgraded credit rating would increase the government’s cost to borrow money, and could also raise interest rates on many consumer loans.
Many lawmakers have expressed deep displeasure with the legislation. Some conservatives say the package does not cut enough spending, and liberals complain the cuts are too deep and that the bill does not raise taxes on the rich.
Even some of the House leaders who voted for the deal are critical.
Republican House Majority Leader Eric Cantor said the deal was not perfect and that it will take more time to change the way Washington spends money. Democratic House Minority Leader Nancy Pelosi also said she was unhappy with many of the provisions.
