Ewen MacAskill and Alex Hawkes
Aug 1, 2011
America has moved away from the brink of a catastrophic default after a deal was reached overnight to raise its debt ceiling.
Stock markets around the world rallied on Monday, in relief that the world’s largest economy would probably avoid running out of cash this week. But the agreement, which includes around $2.5 trillion of spending cuts over the next decade, has been criticised by some on both sides of the political divide, and will probably not save America’s triple-A credit rating.
There is also concern that the deal could still fail to be approved by Congress, which is due to vote on the package on Monday night. Some liberals are angry that the plan, which has been hailed as a triumph for the Tea Party movement, relies on spending reductions rather than tax rises to reduce the US budget deficit. The Democratic leader in the House, Nancy Pelosi, has already warned that some Democrats may be unwilling to support the deal.
Under the plan, announced by Barack Obama late on Sunday, the US debt ceiling will be raised by about $2.4tn, in two stages. In return, the US government deficit will be reduced by a similar amount over the next decade.
This article was posted: Monday, August 1, 2011 at 7:48 am