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The debt ceiling was raised in the last possible moment in a deal that has no one really satisfied. The debt ceiling was raised along with a creation of a “secret super committee” that will dramatically slash spending.
Democrats in the Senate supported the bill despite the huge spending cuts. Forty-five voted “yes” on the bill and six voted “no.” Meanwhile 28 Republicans voted in favor of the bill and 19 opposed it. Sen. Joe Lieberman (I-Conn.) and Bernie Sanders (I-Vt.) voted “yes” and “no,” respectively.
The compromise allows Obama to increase the borrowing limit by $400 billion immediately but also mandates $917 billion in cuts over the next decade. The bill also sets up a committee of 12 lawmakers that will find another $1.5 trillion cuts over the next decade. The bill “puts in place a powerful committee that will ensure further much-needed reform,” said Senate Minority Leader Mitch McConnell (R-Ky.)
“There must be a sharing of sacrifice,” Majority Leader Harry Reid (D-NV) said. “It’s very unfair for millionaires and billionaires not to be contributing.”
Very few lawmakers had positive reactions to the deal.
“This compromise that we reached is not perfect,” said Reid. “We settled for less than we wanted, but so did my friend [McConnell].”
He also complained that the country was forced to such an impasse because of the “very, very disconcerting” impact of the Tea Party.
McConnell was more satisfied with the outcome. “It was a debate that Washington very much needed to have,” he said. “The American people agree with us on the nature of the problem … if you’re spending yourself into oblivion, the solution isn’t to spend more, it’s to spend less.”
“The bill doesn’t solve the problem, but it forces us to admit we have one,” McConnell added.
Other tea-party backed Republicans were less optimistic over the outcome. “To me it comes close to violating our oath of office,” said Sen. Jon Kyl (R-Ariz.) about the potential cuts to military spending.
Economists also have mixed reactions about the deal. Raising the debt ceiling provides some stability in an already fragile economy however the huge spending cuts will continue to slow the economy.
“The federal government spends huge amounts of money, and to the extent, in the short-term, that it’s not spending that amount of money, there will be an impact to the economy,” said Ernie Patrikis, a banking partner at White & Case and former vice president of the New York Federal Reserve. He said that while he thought the stability would encourage more investment, “the impact on unemployment is not terribly helpful.”
“It’s definitely a drag — the only question is how much,” said Dean Baker, co-director of the Center for Economic and Policy Research. “We’re going backward when we desperately need to go forward.”
According to the Huffington Post, the Democrats began the debate stating that the hike in the debt ceiling be “clean” and not tied to spending cuts. They gave ground continually for months, and McConnell happily pointed out that the White House once labeled any linkage to future spending “insane.”