WASHINGTON — With the deadline for raising the nation's debt ceiling only hours away, President Barack Obama signed a historic deficit-reduction package into law Tuesday that aims to cut trillions of dollars from federal spending while increasing the debt limit immediately.
Obama acted just hours after the Senate passed the bill on a bipartisan 74-26 vote.
The president called the weeks-long standoff over raising the debt ceiling "a manufactured crisis" that didn't help a faltering economy.
"It's pretty likely that the uncertainty surrounding the raising of the debt ceiling for both businesses and consumers has been unsettling and just one more impediment to the full recovery that we need," he said. "And it was something that we could have avoided entirely."
He also made it clear that he'll continue to press for tax increases in the months ahead to help balance the federal budget.
"Since you can't close the deficit with just spending cuts, we'll need a balanced approach where everything's on the table," he said. "Everyone's going to have to chip in. That's only fair. That's the principle I'll be fighting for during the next phase of this process."
During debate on the Senate floor, even supporters were similarly unsatisfied with the result of all the weeks of acrimonious Washington deal making.
"On this matter my conscience is conflicted," said Senate Assistant Majority Leader Richard Durbin, D-Ill. "If this bill should fail, we will default on our nation's debt ... terrible things will ensue." But he also worried about its trillions of dollars in spending cuts and "all of the consequences on innocent people in America."
Senate Republican leader Mitch McConnell of Kentucky was a bit more upbeat. "We've had to settle for less than we wanted, but what we've achieved is in no way insignificant. And we did it because we had something Democrats didn't. Republicans may only control one-half of one-third of the government in Washington, but the American people agreed with us on the nature of the problem," he said.
"And if you're spending yourself into oblivion, the solution isn't to spend more, it's to spend less."
The Senate's action followed the vote Monday in the House of Representatives, where a bipartisan majority approved the deal. In the House, 174 House Republicans and 95 Democrats voted for the measure, and 66 Republicans and 95 Democrats voted against it.
The mood in the Senate was similar to that in the House: reluctant acceptance of the package.
"To say the legislation before us is not ideal is truly an understatement," said Sen. Carl Levin, D-Mich.
But he added, ''Despite its many flaws, the legislation must pass."
Conservatives and liberals had different reasons for opposing the measure.
"At the end of the day, this bill allows Washington to continue business as usual in the irresponsible way it spends hard-earned tax dollars.," said Sen. James Inhofe, R-Okla.
From the left, Sen. Bernard Sanders, a Vermont independent, had a different complaint.
"The wealthiest people in this country and the largest corporations, who are doing phenomenally well today, are not being asked to contribute one penny in shared sacrifice toward deficit reduction," he said.
"On the other hand, middle-class and working families, who are suffering terribly in the midst of this horrible recession, are being asked to shoulder 100 percent of the human cost of lowering our deficit. This is not only grossly unfair, it is bad economic policy."
The agreement would cut deficits by $917 billion over 10 years, according to an analysis by the nonpartisan Congressional Budget Office. Those reductions would allow the debt limit to be raised by $900 billion, which is expected to be enough to last through early next year.
About $350 billion in cuts would come from defense spending. The rest would come from reductions in a variety of domestic programs, such as education, housing and transportation. Medicare, Medicaid and Social Security wouldn't be cut.
A second series of reductions, totaling as much as $1.5 trillion, would be subject to a vote by late December. A special bipartisan joint congressional committee will recommend specifics. The committee must make recommendations by Nov. 23, and Congress must vote on them by Dec. 23.
If those recommendations aren't approved on up-or-down, non-amendable votes in Congress, programs would be cut automatically across the board — half from defense, half from non-defense — starting in 2013. Social Security, Medicaid, military and civilian pensions, and most low-income programs would be exempt. Medicare reductions would be restricted to payments to providers, and would be limited.
Once the cuts are enacted, the debt limit would go up by at least another $1.2 trillion, which is expected to give the government sufficient borrowing authority through 2012.
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