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November 27, 2021

Obama signs US debt bill into law after Congress compromise vote

President Barack Obama has signed Tuesday legislation to increase the US debt ceiling and avert a financial default, after Congress voted in favour of a bipartisan compromise deal, BBC informs. The bill cleared its final hurdle in the Senate by 74 votes to 26, after negotiations went down to the wire. It raises the debt limit by up to USD 2.4 tn from USD 14.3 tn, and makes savings of at least USD 2.1 tn in 10 years. But the bill’s passage failed to lift financial markets. On Wall Street stocks ended Tuesday down by more than 2 pc, amid poor consumer spending data for June. Japan’s Nikkei index followed suit, finishing Wednesday morning down by about the same amount.

Moody’s rating agency reacted to the bill by placing Washington’s AAA credit score under a “negative outlook”. Chinese credit agency Dagong downgraded its rating of the US from A+ to A, Xinhua news agency reported. The bill’s signing came just 10 hours before the expiry of a deadline for Washington to raise its borrowing limit, after drawn-out talks between Republicans, Democrats and the White House. Without a deal to raise the debt ceiling, the US would have been unable to meet all its bills, the treasury department had warned. Speaking at the White House shortly after the decisive vote in the Senate, President Obama said it was “pretty likely that the uncertainty surrounding the raising of the debt ceiling for businesses and consumers has been unsettling”. He urged Congress to now look to boost the economy through measures to create jobs and increase consumer confidence.

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