Done deal: Obama signs legislation to end shutdown
As Barack Obama signs legislation to end a US government shutdown and raise the debt ceiling, he warns congress: “we’ve got to get out of the habit of governing by crisis.”
Taking the podium in the White House briefing room on Wednesday night, President Obama said that with final congressional passage: “We can begin to lift this cloud of uncertainty and unease from our businesses and from the American people.
“Hopefully next time it won’t be in the 11th hour.”
President Obama outmanoeuvred Republicans by holding firm in defence of “Obamacare” to win agreement, with few strings attached, to end the 16-day shutdown.
Back from the brink
The deal pulls the world’s biggest economy back from the brink of a historic debt default that could have threatened financial calamity.
Capping weeks of political brinkmanship that had unnerved global markets, Mr Obama quickly signed the spending measure, which passed the Senate and House of Representatives after Republicans dropped efforts to use the legislation to force changes in his signature healthcare law.
The White House budget office told hundreds of thousands of federal workers, the bulk of whom had been idle for the past 16 days, to be ready to return to work on Thursday.
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The down-to-the-wire deal, however, offers only a temporary fix and does not resolve the fundamental issues of spending and deficits that divide Republicans and Democrats.
It funds the government until 15 January and raises the debt ceiling until 7 February, so Americans face the possibility of another bitter budget fight and another government shutdown early next year.
With the deadlock broken just a day before the US treasury said it would exhaust its ability to borrow new funds, US stocks surged on Wednesday, nearing an all-time high. Share markets in Asia also cheered the deal.
World Bank President Jim Yong Kim said “the global economy dodged a potential catastrophe” with congressional approval of the deal to raise the $16.7tr US debt ceiling.
Political dysfunction
Although the deal would only extend US borrowing authority until the first week of February, the Treasury Department would have tools to temporarily extend its borrowing capacity beyond that date if congress failed to act early next year. But such techniques eventually run out.
In addition to lifting the federal debt limit, the deal calls for creating a House-Senate bipartisan commission to try to come up with long-term deficit-reduction ideas that would have to be approved by the full congress.
Their work would have to be completed by 13 December, but some lawmakers say the panel faces an extremely difficult task.
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The agreement also includes some income verification procedures for those seeking subsidies under the 2010 healthcare law.
But it was only a modest concession to Republicans, who surrendered on their latest attempt to delay or gut the healthcare package or include major changes, including the elimination of a medical device tax.
The congressional vote signalled a temporary ceasefire between Republicans and the White House in the latest struggle over spending and deficits that has at times paralyzed both decision-making and basic functions of government.
The political dysfunction has worried US allies and creditors such as China, the biggest foreign holder of US debt, and raised questions about the impact on America’s prestige. The Treasury has said it risks hurting the country’s reputation as a safe haven and stable financial centre.