President Obama confirmed yesterday that a bipartisan agreement has been reached between parties that would allow the debt ceiling to be raised.
The risk of default has been averted before the August 2 deadline, as both Democrats and Republicans negotiators have agreed to $1 trillion in cuts over the next 10 years.
The new proposals will go before a congressional vote today. If the deal is passed, the $14.3 trillion debt ceiling will be raised by a further $2.4tn.
President Obama remained defiant on the subject of eliminating tax loopholes in his address to the press yesterday, although this point does not feature in the current proposal.
He said: “Now, I’ve said from the beginning that the ultimate solution to our deficit problem must be balanced. Despite what some Republicans have argued, I believe that we have to ask the wealthiest Americans and biggest corporations to pay their fair share by giving up tax breaks and special deductions.“
Obama also reiterated that this was not the deal he would have preferred and would reduce domestic spending to the lowest level since Dwight Eisenhower was President.
The White House has come under pressure from all sides in recent weeks as negotiations remained deadlocked. Credit rating agency have added to concerns by indicating the US was facing a decent chance of being downgraded.
Standard and Poor’s said last week that the US faced losing its AAA rating if it failed to avoid a default.