After weeks of political brinkmanship, the Democrats and the Republicans agreed to a compromise deal late Sunday evening to raise the US debt ceiling from the current $14.3 trillion by about $2.4 trillion and simultaneously cut spending by an equivalent amount. The US had breached the borrowing limit on May 16, and if Congress did not raise it further by August 2, the country would have run out of money to pay interest and principal on Treasury bonds-an unprecedented event in American history-as well as for other expenses such as social security and medicare benefits. The US federal law requires Congress to authorise any increase in borrowing to spend on approved programmes. Here is what the deal is all about: Debt ceiling: To be raised by up to $2.4 trillion in three stages, enough to enable the government to function till 2012 end; $400 billion right away, another $500 billion later this year, subject to vote of disapproval; and a third increase of $1.5 tr...
