Obama, US Congress reach 11th hour deal

WASHINGTON (AP) – Ending a perilous stalemate, President Barack Obama and US congressional leaders announced a historic agreement Sunday night on emergency legislation to avert the nation’s first-ever financial default.

The dramatic resolution lifted a cloud that had threatened the still-fragile economic recovery at home - and it instantly powered a rise in financial markets overseas.

The agreement would slice at least $2.2 trillion from federal spending over a decade, a steep price for many Democrats, too little for many Republicans. The Treasury’s authority to borrow would be extended beyond the 2012 elections, a key objective for Obama, though the President had to give up his insistence on raising taxes on wealthy Americans to reduce deficits.

The deal, with scant time remaining before the Aug. 2 debt-limit deadline for paying government bills, “will allow us to avoid default and end the crisis that Washington imposed on the rest of America,” Obama said in an announcement at the White House.

Default “would have had a devastating effect on our economy,” he said.

House Speaker John Boehner telephoned Obama at mid-evening to say the agreement had been struck, then immediately began pitching the deal to his fractious rank and file.

“It isn’t the greatest deal in the world, but it shows how much we’ve changed the terms of the debate in this town,” he said on a conference call, according to GOP officials. He added the agreement was “all spending cuts. The White House bid to raise taxes has been shut down.”

The House Democratic leader, Rep. Nancy Pelosi, was noncommittal. “I look forward to reviewing the legislation with my caucus to see what level of support we can provide,” she said in a written statement.

Many economists have expressed concerns that the spending cuts could threaten an already feeble economic recovery. The first half of 2011 marked the worst six-month economic performance since the Great Recession officially ended in June 2009.

No votes were scheduled in either house of Congress before Monday, to give rank and file lawmakers time to review the package. Senate approval seems virtually certain; the House could prove more difficult.

Without legislation in place by Tuesday, the Treasury would not be able to pay all its bills, raising the threat of a default that administration officials say could inflict catastrophic damage on the economy.

If approved, though, a compromise would presumably preserve America’s sterling credit rating, reassure investors in financial markets across the globe and possibly reverse the losses that spread across Wall St. in recent days as the threat of a default grew.

P-Noy worried over  US debt crisis

The possibility of the shrinking value of dollars overseas Filipino workers (OFWs) have been remitting to their families and the high cost of exports have worried President Aquino, who directed his economic team to assess the local impact of the US debt crisis.

“He wanted to know what the possible effects are of something like this. He expressed some concerns about the rising peso and the impact that it would have on exporters,” Secretary Ricky Carandang of the Presidential Communications for Strategic Planning and Development said.

In a meeting with his economic managers, the President tasked his team to “take a look at all the possible effects of this” in light of the fact that the US – aside from being an ally – is a major trading partner of the Philippines.

“The President expressed some concern about it and the economic team had already begun to discuss this even before the President expressed the concern. So they’re onboard, they anticipated what the President would want them to do,” Carandang assured.

Carandang said the President has “particular concern” over the strengthening of the peso against the dollar, which may cause some “dislocation” on the part of OFWs’ families.