United States President Barack Obama has signed a deficit-cutting package into law that will avert the prospect of a US debt default.
Just hours before the Treasury's authority to borrow funds ran out on Tuesday, the Senate voted 74 to 26 to pass a hard-won deal that lifts the government's $US14. 3 trillion debt ceiling enough to last beyond the November 2012 elections.
There was little suspense about the outcome of the vote in the Democratic-controlled Senate.
The bill had already on Monday overcome its biggest hurdle when the Republican-led House of Representatives passed the $US2.1 trillion deficit-reduction plan despite some resistance from Tea Party conservatives and liberal Democrats.
After the Congress decision, Moody's Investors Service, one of the three major ratings agencies, upheld its AAA rating on the US but added a "negative outlook" on the grade.
It said a downgrade could still occur if fiscal discipline weakens or economic growth deteriorates significantly.
Another agency, Fitch Ratings, had earlier confirmed the same rating but did not rule out putting a negative outlook on the rating when it concludes a review of the country later in August, Reuters reported.
Standard and Poor's said in mid-July there was a 50-50 chance it would cut the US rating in the next three months if lawmakers failed to craft a meaningful deficit-cutting plan.
A rating downgrade would raise borrowing costs and act as another drag on the economy.
'More needed'
Barack Obama said the debt deal was an important first step toward ensuring the US lives within its means, but more is needed to rebuild the country's economy.
Mr Obama made clear he expects tax reform to emerge from deliberations around a new joint bipartisan committee to be established by the legislation, and that a "balanced approach" in which the wealthier pay more taxes is needed for more deficit reduction.
He also said uncertainty from the debt debate has been an impediment to business, but that the economic recovery has also been hampered by such unforeseen problems as the Japan earthquake.
The president urged Congress to pass stalled trade bills and said he wants unemployment benefits extended. He later signed the deficit-reduction measure into law.
