US Senate Majority Leader Harry Reid talks about the debt limit negotiations.
Source: Press TV
The US House of Representatives has approved a bill to raise the federal debt ceiling and prevent a US debt default by a 269-161 vote as 95 Democrats joined 174 Republicans in voting in favor of the bill.
Before becoming a law, the new legislation must also be passed by the US Senate on Tuesday and approved by President Barack Obama to authorize at least $2.1 trillion in spending cuts over the next ten years, AFP reported.
Senate party leaders who negotiated the deal with the White House seem to have the votes to approve it.
The bill allows the $14.3 billion borrowing ceiling to rise by up to $2.4 trillion and also envisages $900 billion in savings. In addition, it calls for a bipartisan committee comprising six Republicans and six Democrats to identify $1.5 trillion in additional cuts before November 23. The cuts could come from defense spending or entitlement programs such as Social Security.
The bill also says that in case the Congress fails to act, Social Security and Medicaid, as well as veterans, civilian, and military pay, will be excluded from automatic cuts, though the slightly revised version of House Speaker John Boehner's plan has not exempted Medicare.
According to the Congressional Budget Office, the legislation will cut budget deficits by $917 billion between 2012 and 2021.
The US officially hit its debt ceiling on May 16.
Washington owes about 47 percent of the money to foreigners. The biggest creditors are China, Japan, and the United Kingdom.