Debt Deal Ushered into Law as Obama Hails ‘Important First Step,’ Pivots to Next Fight

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Jason Reed / Reuters

With less than 11 hours left before the U.S. faced taking drastic action to avoid a default, the Senate on Tuesday overwhelmingly passed legislation to raise the nation’s debt ceiling and trim federal deficits. The measure passed 74-26, mostly on Democratic support — 45 Democrats, one independent who caucuses with the Dems and 28 Republicans voted yes — a reversal of the House vote on Monday night, which relied mostly on Republican support.

The legislation, which has already been signed into law by President Obama, will raise the debt ceiling by $917 billion, taking the country through the end of the year. Early next year, it will be extended again through a process in which Republicans will get to vote their disapproval of the Democrats’ handling of the debt crisis. Separately, a supercommittee of six Republicans and six Democrats will look for an additional $1.5 trillion in savings. If they cannot agree — the key argument will be whether to include revenue increases — then automatic across-the-board cuts of $1.2 trillion will be triggered in early 2013.

The last-minute resolution of the debt debate produced palpable relief in Washington but offered little reason for celebration. Recent polls suggest the American public was turned off by the whole affair, and approval ratings for members of both parties have suffered. In a speech at the White House, Obama hailed the legislation as “an important first step to ensure that the nation can live within our means,” but he chided Congress for pushing the nation to the brink.  “Voters may have chosen divided government,” he said, “but they sure didn’t vote for dysfunctional government.”

Neither party was satisfied with the final product. Progressives were disappointed that the bill thus far has not included any revenue increases. There are 23 Senate seats that Democrats must defend in the 2012 elections. With a large number of their would-be GOP opponents likely to support the deal, Senate Democrats had little political choice but to hold their noses and vote for it. “It helps by not hurting them,” says Jennifer Duffy, Senate editor at the nonpartisan Cook Political Report, which tracks congressional races. “For most [Democrats], voting against this would create enormous problems for them next year.” Conservatives were unhappy that the bill did not go further in slashing spending.

Both chambers of Congress will recess for the month of August, a quiet break from a rancorous year in Washington. After two rounds of brinksmanship nearly shut down the government over the 2011 budget impasse and almost scuttled the economy over the debt ceiling, Congress has little will for more fighting, and Americans have little desire to watch them scrap it out. That’s why the hard-fought legislation passed on Tuesday greases the congressional skids for the next 16 months — through the 2012 elections. The bill sets the 2012 spending level, avoiding another bruising fight over budget cuts and a potential government shutdown in September, when the 2011 fiscal year ends. While there may still be controversial riders on issues such as abortion, overwhelming support for the debt-ceiling bill, which cuts $7 billion from the 2012 budget, will make it harder for conservatives to push for additional cuts. The legislation passed Tuesday also decouples the fraught debt-ceiling issue from the next round of cuts prescribed by the supercommittee.

In his remarks, President Obama pivoted from the messy issue of debt to renew his calls for congressional action to help boost the economy — extending targeted tax cuts and unemployment benefits, finalizing trade deals and making infrastructure-construction loans. Republicans oppose most of Obama’s requests. That means Washington will still be having fierce debates in the next 16 months, even if they lack the teeth the debt fight had. And if that’s not enough, there are still the Republican presidential primaries to look forward to.

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