Senate passes US debt deal; Obama to sign into law

Disastrous debt default avoided with just hours to spare; US president says deal an important first step but more needed to rebuild economy.

Obama White House speech 311 (photo credit: REUTERS/Jim Watson/Pool)
Obama White House speech 311
(photo credit: REUTERS/Jim Watson/Pool)
US Congress buried the specter of a debt default by finally passing a deficit-cutting package on Tuesday, but the shadow lingered of a possible painful downgrade of the top-notch American credit rating.    Just hours before the Treasury's authority to borrow funds ran out, the Senate voted 74 to 26 to pass a hard-won compromise to lift the government's $14.3 trillion debt ceiling enough to last beyond the November 2012 elections.
RELATED:Giffords returns to US Congress after shooting
US President Barack Obama, who will seek a second term next year, was expected to immediately sign the deal into law, although without any White House ceremony.
His signature would draw the line under months of bitter partisan squabbling over debt and deficit strategy that had threatened chaos in global financial markets and dented America's stature as the world's economic superpower.
Obama said on Tuesday that the debt bill is an important first step toward ensuring the United States lives within its means, but that more is needed to rebuild the US economy.
In a Rose Garden statement, Obama made clear he expects tax reform to emerge from deliberations around a new joint bipartisan committee to be established by the legislation, and that a "balanced approach" in which the wealthier pay more taxes is needed for more deficit reduction.
Obama also said uncertainty from the debt debate has been an impediment to business, but that the economic recovery has also been hampered by such unforeseen problems as the Japan earthquake.
Obama urged Congress to pass stalled trade bills and said he wants unemployment benefits extended.