The Senate approved the bipartisan debt bill today, increasing the government's borrowing authority with just hours to spare before hitting the debt ceiling. After passing the House last night, the Senate approved the bill in a 74-26 vote, sending it on to President Barack Obama for his signature.
As previously reported, the deal raises the debt ceiling in two stages, initially providing an immediate $400 billion increase in the $14.3 trillion borrowing cap, then raising it another $500 billion this fall. The agreement also cuts agency budgets and creates a bipartisan committee to draft legislation that finds an additional $1.5 trillion in deficit cuts that will be voted on later this year.
Agreement on the new bipartisan committee will be incentivized by the fact that failure to find common ground on which budgets to slash would trigger automatic spending cuts across the board, including cuts to defense spending.
While the deal prevents a default, a ratings downgrade from one of the big three credit rating agencies, Fitch, Standard & Poor's and Moody's, could still be forthcoming, due to the fact that the bill kicks many major decisions down the road and leaves investors with little in the way of certainty.
Stay tuned to NACM's blog for more updates.
Jacob Barron, NACM staff writer