by Jiang Xufeng, Liu Lina
|Photo released by the White House shows U.S. President Barack Obama signing a bipartisan bill of raising the nation's debt limit into law, ending the month-long perilous stalemate and averting a potentially catastrophic debt default risk, at the White House in Washington, the United States, Aug. 2, 2011. (Xinhua)
WASHINGTON, Aug. 2 (Xinhua) -- U.S. President Barack Obama Tuesday signed a bipartisan bill on raising the nation's debt limit into law, hours before the federal government runs out of borrowing capacity, ending a month-long perilous stalemate.
Obama signed the bill into law less than two hours after the measure cleared the U.S. Senate with a 74-26 vote to avert a potentially catastrophic debt default risk.
The two-stage deal emerged Sunday and was sealed among Obama, Republican and Democratic congressional leaders, which aimed at slashing deficit for more than 2 trillion U.S. dollars over the next decade, setting up a powerful congressional bipartisan committee to find new ways on deficit cutting, and raising the U.S. borrowing limit through 2013.
The last-ditch bill sailed through the Democratic-led upper chamber as expected, and the Republican-controlled House approved it on Monday night on a bipartisan vote of 269 to 161.
The first part of the hard-bargained deficit cutting proposal will impose 917 billion dollars in discretionary spending cuts over the next decade, according to the latest analysis from the nonpartisan Congressional Budget Office.
The bill will also create a bipartisan and two-chamber committee to identify new deficit reduction in the amount of at least 1.2 trillion dollars, in tandem with the second tranche of debt limit increase by November.
Experts held that the deficit cutting in the deal will only go a short way toward slashing the spiking debt, but at least this austerity bill had changed the conversation dynamics in Washington and was a step in the right direction on the longer-term fiscal adjustment path.
The bill is an important first step for the nation's long-term fiscal consolidation, Obama said at a Tuesday White House press conference after the Senate voting.
The bipartisan agreement will slow down the "big government freight train" and the country is headed for the right direction, Senate Republican leader Mitch McConnell, a key player in the month-long partisan wrangling and negotiation, said Tuesday.
"It's an important first step to ensuring that as a nation we live within our means. Yet it also allows us to keep making key investments in things like education and research that lead to new jobs, and assures that we're not cutting too abruptly while the economy is still fragile," Obama told reporters.
Obama stressed that the nation needs a balanced way on deficit reduction and the wealthiest Americans should also sacrifice for slashing government deficit.
A balanced approach should include making adjustments to protect health care programs like Medicare for future generations and "reforming our tax code so that the wealthiest Americans and biggest corporations pay their fair share," Obama added.
Christine Lagarde, managing director of the International Monetary Fund (IMF), Tuesday said that the Washington-based agency welcomed the agreement to raise the U.S. government's borrowing limit and cut the government deficit.
By reducing a major uncertainty in the markets and bolstering U.S. fiscal credibility, this agreement is good for both the United States and the global economy, Lagarde noted in a statement.
"The challenge for policymakers is now to develop a consolidation framework that includes clear medium-term debt and deficit objectives. Putting public finances on a sustainable path will entail identifying further savings in entitlement spending as well as new revenues," she added.
Shortly after the bill cleared the Senate, China's central bank governor Zhou Xiaochuan voiced the central bank's welcome to the headway made in raising the U.S. federal government's debt limit, adding that the Chinese central bank will keep a close eye on the implementation of the package in different stages.
China is the largest foreign holder of U.S. Treasury securities, with its combined holding of U.S. government debt topping 1.15 trillion dollars by May.
The U.S. Treasury securities had been among the most actively invested and traded instruments in the global market, while large fluctuations and uncertainties in this market would undermine the stability of international financial system and hinder global recovery, Zhou said in a statement.
"China hopes the U.S. administration and Congress would take responsible policy measures to handle its debt issue in light with the interests of the whole world including those of the United States," Zhou added.
"China would continue to seek diversification in the management of reserve assets, strengthen risk management, and minimize the negative impacts of the fluctuations in the international financial market on the Chinese economy," Zhou said.