Obama signed into law without a ceremony the Budget Control Act less than 12 hours before the deadline established for the $14.3 trillion ceiling, which is the legal limit on the amount of debt the federal government can borrow. The president quickly informed Congress it was necessary to raise the limit to pay the government's bills.
The new law, which permits an initial rise in the ceiling of $400 billion, allows a total increase of $2.1 to $2.4 trillion into 2013. The measure also would cut federal spending by an estimated $917 billion, according to the Congressional Budget Office, and establish a procedure to reduce the deficit by at least another $1.5 trillion, providing a deficit reduction of more than $2.4 trillion during the next 10 years.
The legislation brought opposition from some conservatives and some liberals in both chambers of Congress.
The Senate's Aug. 2 roll call was 74-26, with 19 Republicans, six Democrats and an independent voting in opposition. Voting in favor of the bill were 45 Democrats, 28 GOP members and an independent. The House of Representatives voted 269-161 for the proposal Aug. 1, with Republicans favoring it 174-66 and Democrats split at 95 members on each side.
"Considered from the 30,000 foot level, it was a compromise with liberals, who control the Senate and the White House, that took place on the conservatives' turf," said Southern Baptist public policy specialist Barrett Duke. "Clearly, the ideal was not achieved by any stretch of the imagination.
"The Budget Control Act should simply be seen as the next act in a multi-act play, with plenty more to come as we seek to pull our country back from the brink," said Duke, vice president for public policy and research of the Ethics & Religious Liberty Commission (ERLC).
Obama called the new law "just the first step. This compromise requires that both parties work together on a larger plan to cut the deficit, which is important for the long-term health of our economy."
In a written statement, Speaker of the House John Boehner used similar terminology after congressional passage, describing the measure as "a positive step forward that begins to rein in federal spending, but it's only a step. We should save the celebration for when a Balanced Budget Amendment is ratified, the deficit is fixed, and our economy has returned to creating jobs."
Reaction to the legislation's enactment continued to demonstrate that a gulf remains between Republicans and Democrats. While the law reflects the GOP's commitment to not increasing taxes, Obama said Aug. 2 deficit reduction would require higher taxes on "the wealthiest Americans and biggest corporations."
Prior to its passage of the Budget Control Act, the House twice forwarded measures that failed in the Senate. House members adopted July 19 the Cut, Cap and Balance Act, which required congressional approval of a balanced budget amendment to the Constitution before the debt ceiling could be increased. On July 29, the House passed debt-limit legislation that mandated a vote on such an amendment in each chamber.
The ERLC endorsed the Cut, Cap and Balance (CCB) proposal, which also would have capped spending on a declining scale from 22.5 percent of the gross domestic product next year to 19.9 percent in 2021.
Duke described Cut, Cap and Balance as "the best solution for now and for our nation's long-term financial health. After Senate Democrats refused two times to even let the Senate debate such a measure, much less vote on it, it was crystal clear that CCB must wait for another day."
"In the meantime, some progress was made toward that goal -- spending cuts were put in place and there were no tax increases" in the legislation that became law, Duke said.
The new law requires the House and Senate vote on a balanced budget amendment before the end of the year but leaves the specifics of such an amendment undefined.
What is sure to be one of the more contentious aspects of the new law is its establishment of a Congressional Joint Select Committee on Deficit Reduction. The "super committee," as it has come to be known, would consist of 12 members -- six from each house split evenly between the two parties.
By Nov. 23, the "super committee" would present to Congress a recommendation to cut at least $1.5 trillion over 10 years. The House and Senate are required to act on the proposal by Dec. 23.
If the "super committee" fails to agree on savings of at least $1.2 trillion, across-the-board spending reductions of about the same amount would go into effect.
"We'll have to wait and see what comes out of this Joint Committee on Deficit Reduction," Duke said. "Clearly, everyone has reason to want to see it find the needed cuts that Congress can agree to. Hopefully, it will, but it is going to be very difficult."
One of the concerns with the across-the-board cuts is they could weaken the country's security. The law requires reductions to be divided evenly between defense and non-defense spending.
Tom Strode is Washington bureau chief for Baptist Press.
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