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Video: Moving beyond the debt deal

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    BRIAN WILLIAMS, anchor: Now back to the cold reality of business. More on this debt ceiling deal, which is now the debt ceiling law. Chuck Todd , our chief White House correspondent, with us from there. Chuck , take it away.

    CHUCK TODD reporting: Brian , look, it's a detente, more -- no more than that, and it capped off a really contentious debate. And despite this bipartisan support for the deal, it's a deal nobody wants to take credit for. President Obama today didn't praise the deal, only expressed relief.

    President BARACK OBAMA: Our economy didn't need Washington to come along with a manufactured crisis to make things worse.

    TODD: He called the $2.5 trillion deficit reduction package simply a first step and argued more must be done.

    Pres. OBAMA: Yes, that means making some adjustments to protect health care programs like Medicare so they're there for future generations. It also means reforming our tax codes so that the wealthiest Americans and biggest corporations pay their fair share.

    TODD: The bill he signed in private passed the Senate with a large bipartisan majority, but few expressed enthusiasm.

    Senator CARL LEVIN (Democrat, Michigan): To say that the legislation before us is not ideal is truly an understatement.

    Senator MITCH McCONNELL (Republican, Minority Leader): Now, this bill does not solve the problem. But it at least forces Washington to admit that it has one.

    TODD: It remains unclear which government programs will be the biggest losers since it falls to a bipartisan super committee to identify $1.5 trillion of the cuts later this year. Familiar political posturing for that committee's task is already begun, with Republicans pledging not to appoint anyone open to tax hikes, and Democrats worried about Medicare and Social Security being targeted.

    Senator HARRY REID (Democrat, Majority Leader): I think that people going on the joint committee should be open to solving the debt problems of this country and not let ideology stand in the way.

    TODD: This debate brought Washington to a screeching halt as Congress failed to act on a number of economic items, including extending long-term employment benefits; approving trade agreements with South Korea , Panama and Colombia ; and streamlining the patent process, a potential shot in the arm for small businesses.

    Pres. OBAMA: Both parties need to take responsibility for improving this economy.

    TODD: And boy, did the White House send the signal they are ready to move on, confirming the president heads to Chicago for a fundraiser, his first one in a month. He -- it's a birthday fundraiser. And then they also used today to announce the president's 9/11 plans. It's the 10th anniversary. On that day, Brian , he plans to travel from the Pentagon to Shanksville , Pennsylvania , and then to ground zero.

    WILLIAMS: Yeah, it was clear from his remarks today, he's trying to turn the page. Chuck Todd at the White House . Chuck , thanks.

By
updated 8/2/2011 4:42:48 PM ET 2011-08-02T20:42:48

The U.S. avoided a feared and catastrophic default on the American debt, as lawmakers on Tuesday passed a measure that ties an agreement to raise the government's capacity to borrow to steep cuts in government spending.

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The Senate passed the measure Tuesday, a day after it passed the House of Representatives, and President Barack Obama quickly signed it into law.

The emergency bill increases the nation's $14.3 trillion cap on borrowing, thus avoiding default just hours before the midnight deadline, and begins the process of curbing the country's spiraling debt.

Focus shifts from debt to campaign trail

The administration had said the government could not pay all its bills without the new borrowing authority, and it warned that default would severely damage the global economy and push the U.S. back into recession or worse. Even with the legislation now in place, there are fears that the last-minute sparring could shake rating agencies' confidence and harm the country's Triple-A credit rating.

Though the compromise deal passed, it deeply angered both conservative Republicans and liberal Democrats. Many Republicans contended the bill still would cut too little from federal spending; many Democrats said much too much.

A deeply frustrated Obama, while praising Congress for finally passing the compromise bill, demanded legislators immediately turn their attention to fixing the economy and creating jobs.

"We've got to do everything in our power to grow this economy and put America back to work," he said, shortly after the Senate voted 74-26 to pass the measure.

Story: After debt deal, economy in deeper peril

He also said he was not giving up on his insistence that Congress allow taxes to be raised on big corporations, through an end to loopholes, and the richest Americans once both houses return from their summer recess in early September. The measure that now becomes law relies wholly on cutting spending as a tool for lowering the American deficit.

"We can't balance the budget on the backs of the people who've borne the brunt of this recession," the president said.

Polls showed Americans largely supported Obama's contention that taxes need to be raised for those earning incomes above $250,000, while revoking loopholes that benefit hugely profitable oil companies and operators of hedge funds. Nevertheless, the extended and bitter fight over raising the debt ceiling, a routine matter for in past Congresses, damaged the standing of Obama and lawmakers.

A new CNN/ORC International poll found that just 14 percent of those questioned approved of the way Congress is handling its job. Obama approval rating stood at 45 percent.

Video: Did Obama cave to the GOP? (on this page)

He deeply alienated many members of his liberal base as he took increasingly centrist positions, apparently banking on picking up support from independent, middle-of-the-road voters.

After weeks of some of the nastiest political battles in recent U.S. history, both the Senate and House easily adopted the plan. In tandem, legislators approved more than $2 trillion of budget cuts over the upcoming decade.

"Neither side got all it wanted, each side laments what it didn't get," Democratic Majority Leader Sen. Harry Reid said.

"Today we made sure America can pay its bills. Now it's time to make sure all Americans can pay theirs," said Reid, foreshadowing Democrats plans to shift their attention to creating jobs. U.S. unemployment remains above 9 percent.

A breakdown of the debt-limit legislation

Because the deal prescribes significant cuts to U.S. federal spending, it was widely expected to buoy global investors and diminish chances of Treasury bonds undergoing a credit downgrade. That would increase the cost of borrowing both for the government and consumers.

But as the measure cleared its last legislative hurdle, markets around the world were down. In the U.S., the Standard & Poor's 500 lost 2.6 percent to finish at its lowest point of the year, 1,254, after falling for seven straight days.

Story: Many questions linger over debt and deficit accord

Investors were unnerved by spreading debt troubles in Europe and a decline in U.S. consumer spending to the lowest level in two years. The bad news signaled a further slowing of the fragile U.S. economic recovery and snuffed out optimism over the hard-fought vote in Congress.

Polls showed that Congress and Obama have taken a sharp hit in U.S. public opinion because of the prolonged battle over lifting the debt ceiling, something that past Congresses have done as a matter of course.

Story: Senate fails to end costly FAA shutdown

Without legislation in place by the end of Tuesday, the Treasury would run out of cash needed to pay investors in Treasury bonds, recipients of Social Security pension checks, anyone relying on military veterans' benefits and businesses that do work for the government.

Treasury Secretary Timothy Geithner told ABC News Monday that he doesn't know if the bruising debt-limit battle will harm America's Triple-A credit rating, but says he fears "world confidence was damaged by this spectacle."

Geithner told ABC that credit rating is "not my judgment to make." But he also says "this is, in some ways, a judgment on the capacity of Congress to act."

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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