US PRESIDENT Barack Obama, while announcing the decision to raise the debt limit from the White House, nevertheless, added that the discussion within the US Congress had not ended but the immediate crisis has been taken care. Had the US defaulted on its debt repayment, it would have immediately led to downgrading of US currency and investment value – sending ripples across the global economy.

While reaching the deal the US Congress took some hard decisions. Nearly one trillion dollars worth of spending will be cut over the next 10 years, though the Congress also raised the borrowing ceiling by the same amount.

The much-needed breakthrough notwithstanding, there could still be some drama left to play out as the US Congress must approve the deal, and Obama will have to put his signature on it by 11:59 p.m., Tuesday - to stop the U.S.

The approved deal will move up the country’s debt limit by at least $2.1 trillion, while cutting down on government spending over the next 10 years. There would, also, be no need to raise the ceiling till 2013.

In a bid to cut spending, the US government will undertake tax reforms (like increasing tax rates for Americans earning more than $200,000), and make changes to Medicare and Social Security entitlements. The US Presidents also wants greater revenue by doing away with tax subsidies for business companies.  

Politicians in Obama’s own party have expressed reservations against the deal saying that the deal the lives of people in the future and that the government has come under pressure from right-wing elements in the US political system.