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Key US Congress vote looms for debt ceiling crisis

August 02/2011

(ICIS) -- Final votes in the US Congress were expected late on Monday and early on Tuesday on a plan to raise the governments borrowing authority, cut federal spending and provide an 11th hour rescue from a possible US default.


The US House of Representatives was scheduled to hold a final vote on Monday night on the debt ceiling package that was worked out between Republican leaders in Congress and the White House.
The broad outlines of that deal were announced by President Barack Obama on Sunday night, although he warned that the agreement to end the US fiscal crisis would not be certain until approved by both the House and Senate.


Under the proposed agreement, the federal government would put a hold on current spending and cut expenditures by as much as USD 2.5 trillion (EUR 1.7 trillion) over 10 years, with spending reductions for both domestic and military programmes.


If approved by Congress, the deal would provide for an immediate USD 1 trillion increase in the nations borrowing authority or debt ceiling, which is currently at USD 14.3 trillion. That USD 1 trillion in the debt limit increase would be matched by about $1 trillion in first stage spending cuts over 10 years.


An additional USD1.5 trillion in borrowing authority would kick in later this year, providing that a special congressional debt-reduction committee comes up with up to USD 1.5 trillion in further spending cuts by late November.


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