Senate Approves Debt Ceiling Deal, Obama on Deck

The U.S. Senate approved the deal to raise the debt ceiling by 74-26 on Tuesday, and will be followed by President Barack Obama’s signing off on the deal this afternoon.

The deal marked a compromise between the Republican-controlled House of Representatives and the Democrat-led Senate, and consists of raising the government’s borrowing cap with promises of more than $2 trillion of budget cuts over the next decade.

According to the Associated Press, “The measure sets up a fall drama that promises to again test the ability of Obama and Republicans to work cooperatively. It establishes a special bipartisan committee to draft legislation to find up to $1.5 trillion more in deficit cuts for a vote later this year. They’re likely to come from such programs as federal retirement benefits, farm subsidies, Medicare and Medicaid. The savings would be matched by a further increase in the borrowing cap.”

While politicians were able to craft a short-term deal, the U.S. remains at risk of a downgrade to its AAA rating by Standard & Poor’s and/or Moody’s, the two most influential rating agencies.  Thus far, the two firms have remained silent over the implications of the debt deal.