1st Aug 11
Obama and Boehner strike a deal at last
by Harry Oldfield
Deal maker: US finally agrees to increase debt
Deal maker: US finally agrees to increase debt
President Barack Obama and leaders of Congress last night announced an historic agreement on emergency legislation that will avert the America’s first-ever financial default.
Thankfully, the dramatic resolution managed to lift a cloud that had been threatening an incredibly fragile American economic recovery while rattling global markets.
Last night’s agreement will slice $2.4 trillion from federal spending in the next ten years, which represents steep prices for the majority of Democrats while still being too little for most Republicans.
The deal is going to allow us to end a crisis Washington imposed on every other town and city in the rest of America,’ insisted Mr Obama.
World markets showed relief immediately, with the FTSE 100 jumping 60 points just ten minutes after opening as Japan’s benchmark Nikkei index was up 1.7 per cent. On Wall Street, all US stock interests surged.
The deal came with less than two days to go to avert what would have been a catastrophic default on North America’s most populated country. The $3 trillion deal, still requiring congressional approval, led to a quick rise in the dollar’s value and rallied on stock markets across Asia.
Despite the excitement, the plan still must win enough support if it is to pass Congress’ two chambers. Although leaders hope that passing the bill is going to be a formality only, frantic scenes are expected behind the scenes today as lawmakers are lobbied by members of their parties.
Default, Obama said from the White House, wouldn’t have had a positive effect on our economy and instead would have been devastating. House Speaker John Boehner called Obama at mid-evening saying that the agreement had already been struck. He then immediately started pitching to his contemporaries.
Although it isn’t the greatest deal, it shows just how much the terms of this debate have been changed in this town, said Obama on a conference call – as alleged by GOP officials. The president then added that the agreement contained nothing but spending cuts and that The White House’s bid to raise taxes had been shut down.
Leaders of either party have managed to reach an agreement, beamed Mr Obama while announcing the deal from the White House and outlining that $1 trillion in federal spending will be cut over 10 years and another $1.2 will be cut automatically should a joint committee fail to find the amount in budget savings.
I want to thank every American who compelled Washington into reaching a deal, he added, and it allows us to pay our bills and reduce the deficit. In a presentation for his fellow Republicans, Boehner said that the joint committee will have to present all of its findings to Congress before 23 November.
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