US lawmakers were debating a deal to raise the federal debt limit with votes planned for late Monday just hours ahead of a looming deadline, DPA reported.
US President Barack Obama announced the deal late Sunday with congressional leaders that would allow the federal debt limit to be raised by 2.4-trillion dollars before the Treasury runs out of funds to pay bills, possibly including pensions and bond payments.
"The cloud of uncertainty has been lifted over our economy," White House spokesman Jay Carney said, while noting Congress still must act.
Vice President Joe Biden was meeting with congressional Democrats to get them on board with the proposal and tell them the deal was "a victory for the American people," Carney said.
Obama and his Democratic Party have been in crisis talks with centre-right Republicans for weeks on the matter with talks breaking down over corresponding efforts to cut the country's deficit. Republicans refused to consider tax increases, while Obama's centre-left Democrats were reluctant to cut spending on social programmes.
The current cap in the national debt is 14.3 trillion dollars. The hike in the debt limit in two stages would be enough to keep the government running past the November 2012 elections, which was a key Obama demand.
The first step of budget cuts would slash spending by nearly 1 trillion dollars over the next 10 years. A second round of reductions would cut up to 1.5 trillion dollars by 2021.
A bipartisan congressional panel would be appointed to find 1.5 trillion dollars in deficit reductions, with reforms to both entitlement programmes and the tax code available. The committee must deliver its proposed legislation by November 23, and Congress must vote on the fast-tracked measures by December 23.
Included in the agreement is a provision that, if Congress fails to find the called-for 1.5 trillion dollars, would automatically slash 1.2 trillion dollars in spending: half from the domestic spending dear to Democrats and half from the defence spending usually supported by hawkish Republicans.
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