Debt deal passed by House of Representatives
The debt deal which America and the world has been holding its breath for was agreed and passed in the House of Representatives late yesterday.
The deal was passed by 269 votes for and 161 against; 174 Republicans and 95 Democrats voted for whilst 66 Republicans (mainly Tea Party) and 95 Democrats voted against.
The deal still has to be approved by the Senate at 12 noon local time today before being sent to the President for signing.
The deal itself allows for the debt ceiling to rise by $2.4 trillion. When the first $900 billion is reached then this will trigger an equal amount in discretionary spending cuts. When the second tranche of $1.5 trillion is needed this will trigger further cuts which will be overseen by a 12 person Congressional committee which has been dubbed the Super Congress. The Super Congress can use tax increases or spending cuts to achieve their aim of a further $1.2 trillion in deficit reduction.
If the Super Congress, which is made up of six Democrats and six Republicans, fails to agree cuts then it will trigger an automatic cut of which half will be from domestic spending and half from defence cuts.
At each stage there will be a vote in Congress.
Whilst the deal reached can only be seen as good news, it has done a huge amount of reputational damage to both parties and it does not include any measures for increasing jobs. The deal moves the problem forward by a few months and into the presidential election season when political imperatives will take precedent over sound government/business management of the economy.