WASHINGTON — The U.S. Senate passed a debt-limit compromise deal today and the president has signed it, ending a summer-long debate over what is normally a routine increase to the country’s borrowing authority.
The House approved the potentially $2.5 trillion increase Monday night. The plan cuts more than $900 billion in spending starting in 2013 and convenes a special joint committee to identify $1.5 trillion more in cuts, which Congress must pass by December. If there is no deal by then, automatic spending cuts will kick in.
The plan passed the Senate 74-26. Both Minnesota Democrats Amy Klobuchar and Al Franken voted for the proposal, though neither was completely pleased with the plan.
Like most Democrats, the two were hoping for revenue increases as part of any plan to raise the debt limit, either through tax increases or closed loopholes in the tax code. But Klobuchar noted that today’s bill was only first round of deficit reduction measures Congress will consider.
She previewed a route by which Congress could end a series of tax loopholes and decline to renew the George W. Bush-era tax cuts for those making more than $250,000 a year. Those measures could save up to $3.5 trillion, she said.
“I would much rather see a balanced approach,” she said. “Not only would that have been smarter, it would have gotten us to that bigger deal that I think would have had a longer term effect on the market. No one can say this was a perfect deal.”
The phased approach to deficit reduction was echoed by President Barack Obama, who spoke about the debt limit deal after its passage.
“This is, however, just the first step,” he said. “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. And since you can’t close the deficit with just spending cuts, we’ll need a balanced approach where everything is on the table.”
Franken expressed his own frustrations with the plan. He said he hopes the deficit reduction committee will reach a “sensible” approach when it reports to Congress as a whole in November.
“I don’t like the deal. It’s not balanced … most Americans want balanced,” Franken said Monday. “The deal doesn’t really reflect the consensus of the American people.
“Now we can get back to our job … growing the economy.”
Ethanol deal postponed
In July, Klobuchar negotiated a deal to end a series of tax subsidies for ethanol production on July 31 and steer $1.3 billion of the savings to the deficit reduction efforts.
Congress never approved the plan, and since the debt limit deal did not include means for ending tax subsidies like this, the plan never passed.
Klobuchar said she will push the plan once Congress returns from its August recess next month, but since the subsidies are already scheduled to expire at the end of the year, the total savings will be less than they would have been if the plan had passed in July.
“We could do it again with a different sum of money in September so that’s what we’re still looking at,” she said.
Devin Henry can be reached at firstname.lastname@example.org.