First hurdle

Lawmakers in the lower house of the United States Congress approved a deal late on Monday to raise the country's debt ceiling in an eleventh-hour vote to avoid a national default.

The lower House of Representatives passed the compromise measure by 269 votes to 161, with the upper Senate yet to vote on the measure.

Democrats were divided evenly on the bill with 95 for, 95 against - while 174 Republicans voted for the measure, with 66 opposing it. Many Democrats feel too many concession shave been made to the right - while members of the ultra-conservative Tea Party movement in the Republican party do not think the measures go far enough.

House Speaker John Boehner, a Republican, said the result justified months of negotiation. "The process works. It may not be pretty, but it works," he told the television news network CNN.

House of Representatives Democratic leader Nancy Pelosi expressed her dissatisfaction ahead of the vote, while still appealing to party members to support the bill. "I'm not happy with it," she said, but added "please think of what could happen if we defaulted."

Two steps to raise the ceiling

A default could result in a slump in value for the dollar and an elevation of interest rates that Washington would have to pay to borrow money. The bill would see the US's $14.3 trillion (10 trilllion euro) debt ceiling raised by about $2.4 trillion in two steps under the deal.

The terms make way for an initial $900 billion in spending cuts over 10 years, paving the way for an initial elevation of the national debt ceiling. Further cuts, of up to another $1.5 trillion, would be decided upon by a special bipartisan congressional committee before the end of the year.

The Democratic-controlled Senate was expected to pass the bill in a vote at noon local time on Tuesday. The legislation will then pass to President Barack Obama, to be signed.

The Senate vote is taking place only hours ahead of a midnight deadline that would see the US unable to pay its debts.

Discontent on both sides

Dissatisfaction with the bill on both sides has largely stemmed from disagreement about the balance between spending cuts and tax increases. Some Republicans have insisted on deep spending cuts without raising revenue, while Democrats favor a combination of tax hikes and saving measures.

Any failure of Washington to pay its debts could have a wider impact on the world economy - prompting fears of a new global economic crisis.

In a rare moment of unity during the proceedings on Monday evening, delegates from across the floor welcomed Democratic Representative Gabrielle Giffords back to the house for the first time since she was shot in the head in her home state of Arizona in January.

Author: Richard Connor (AFP, dpa)
Editor: Catherine Bolsover