U.S. Senate passes budget deal

The United States Senate put an end to months of partisan impasse on Tuesday, passing a landmark budget agreement to raise the debt ceiling and sending the measure to the White House for President Barack Obama's signature just hours before the government's borrowing authority was set to run out at midnight.

The bipartisan vote was 74-26, a margin that belied the intensity of a fight that has left both parties bruised and exhausted.

With the ambivalent support of congressional leaders in both parties and Mr. Obama, the compromise, which passed the House with bipartisan support on Monday night, averts a potential default on the government's debt and provides for increases in the debt ceiling to be phased in, with compensating budget cuts, lasting beyond the 2012 elections.

Enactment of the legislation would signal a pronounced shift in fiscal policy, from the heavy spending on economic stimulus and warfare of the past few years to a regime of steep spending cuts aimed at reducing the deficits so far, without new revenues sought by the White House.

“Make no mistake, this is a change in behaviour from spend, spend, spend to cut, cut, cut,” said Senator Lamar Alexander, Republican-Tennessee, as the debate began on the Senate floor.

But the fight, which is only half over until a second round of deficit reduction is completed over the next five or six months, also exposed deep ideological schisms between and within the political parties, and tarnished the images of Congress and the President alike.

And the fight left many lawmakers on both sides deeply uneasy, including Senator Richard J. Durbin, Democrat-Illinois, and the assistant majority leader, who said he had consulted with the Senate chaplain over his vote, because “from where I stand it is not the clearest moral choice.”

“Plan will hurt”

Liberal critics say the plan will hurt an already limping economy.

Despite the tension and uncertainty that has surrounded efforts to raise the debt ceiling, the House vote of 269-161 was relatively strong in support of the plan, which would cut more than $2.1 trillion in government spending over 10 years while extending the borrowing authority of the Treasury Department. It would also create a powerful new joint congressional committee to recommend broad changes in spending and possibly in tax policy to reduce the deficit.

Scores of Democrats initially held back from voting, to force Republicans to register their positions first.

Then, as the time for voting wound down, Gabrielle Giffords, Democrat-Arizona, returned to the floor for the first time since being shot in January and voted for the bill to jubilant applause and embraces from her colleagues. It provided an unexpected, unifying ending to a fierce standoff in the House.

Although the actual spending cuts in the next year or two would be relatively modest in the context of a $3.7 trillion federal budget, they would represent the beginning of a new era of restraint at a time when unemployment remains above 9 per cent, growth is slowing and there are few good policy options for giving the economy a stimulative kick.

Deep fissures exposed

The negotiations exposed deep fissures within both parties. In the end, 174 Republicans and 95 Democrats backed the deal, and 66 Republicans and 95 Democrats voted against it.

But Republicans and Democrats alike made clear they were not happy with the agreement, which was struck late on Sunday between the leadership of Congress and Mr. Obama.

Senator Harry Reid of Nevada, the majority leader, acknowledged the unrest as the Senate prepared to follow the House in voting.

“Neither side got what they wanted, but it is the essence of compromise,” said Mr. Reid, who said most senators “realise the situation we're in and the alternative.”

House and Senate Republicans, too, raised objections, saying the proposal fell short of what was needed and invested too much power in a new special joint committee that would be charged with finding $1.5 trillion or more in future cuts by Thanksgiving after a first round of $1 trillion called for in the legislation. — New York Times News Service