Deal reached to avoid US debt default

Republicans and Democrats in the US congress have reached an 11th-hour agreement with President Barack Obama to raise the limit on US borrowing and prevent an unprecedented US debt default.
Just two days before a deadline to lift the US debt ceiling, the White House and both Republican and Democratic leaders in congress said the compromise would cut about $2.4tn from the deficit over the next 10 years.
Now that congressional leaders have sealed a deal, both the senate and House of Representatives are expected to vote on Monday and in principle a bill could be on Obama's desk by the end of the day.

While the senate is likely to give its approval, the agreement's fate may be less certain in the House.
If approved, the compromise would presumably preserve America's sterling credit rating, reassure investors in financial markets across the globe and possibly reverse the losses that spread across Wall Street in recent days as the threat of a default grew.
After weeks of impasse and with the final outcome hinging on support from reluctant legislators, Obama pressured both sides to follow up on the accord reached behind closed doors.
"The leaders of both parties in both chambers have reached an agreement that will reduce the deficit and avoid default - a default that would have had a devastating effect on our economy," Obama said at the White House.
"I want to urge members of both parties to do the right thing and support this deal with your votes over the next few days."
Two-step process
The plan - which boosted global financial markets -- involved a two-step process for reducing the US deficit.

The first phase calls for about $900bn in spending cuts over the next decade and the next $1.5tn in savings must be found by a special congressional committee. Congress must act by December 2011, under the deal.
Republicans had insisted on deep spending cuts before they would consider raising the $14.3tn limit on US borrowing, turning a normally routine legislative matter into a dangerous game of brinkmanship.
Resolution of the debt-ceiling impasse could ease the immediate crisis, which has threatened global economic
consequences, but broad repercussions will still be felt for years to come.
While the deal means the US is unlikely to default, it is far from certain whether the plan goes far enough in reducing the deficit to appease credit ratings agency S&P, which has threatened to strip America of its prize AAA rating.
Despite that, markets showed signs of relief after becoming unnerved in recent days.
The Japanese stock index rose 1.8 per cent, US stock futures built on earlier gains and the US dollar rose
modestly against the yen and the Swiss franc. Gold fell more than one per cent, indicating investors had begun to shift out of safe havens.
"For the rally to be durable, markets will need more than this down payment agreement," Mohamed El-Erian, co-chief investment officer at PIMCO, the world's biggest bond fund, said.
"They will look to a more coherent fiscal reform to emerge from the second step and, more generally, for additional measures to remove structural impediments to growth and jobs."
Selling the deal
A key provision of the deal was originally conceived as part of a "fallback" plan in case all else failed.
It would grant Obama the authority - and the blame - to raise the debt ceiling in three steps while allowing
Republicans to avoid explicitly approving each increase.
Congress would get a chance to register their disapproval on two of these, but would not be able to block them unless they muster a two-thirds vote in both the House and the senate - an unlikely prospect.
Congressional leaders will now have to gauge whether they have the votes to pass the deal - which has sharp spending cuts and no new taxes - in the senate and the House.
In the House, the political calculus is complicated by the entrenched opposition of some members affiliated with the conservative Tea Party movement.
John Boehner, the House speaker, who will face opposition from those conservatives in his ranks, told Republicans he backed the accord but that it was not the "greatest deal in the world".
A senior House Republican, Jack Kingston, predicted the deal would pass with broad Republican support, though significant Democratic votes will be needed to guarantee passage.
Harry Reid, the senate Democratic leader, said: "I am relieved to say that leaders from both parties have come together for the sake of our economy to reach a historic, bipartisan compromise."
Nancy Pelosi, a Democratic senator considered crucial to delivering enough Democratic votes to offset Republican defections, offered a muted reaction.
However, congressional insiders expect her to use her political clout with liberals to help Obama push it through.

Deadly Syrian crackdown continues

Syrian forces have killed nearly 142 people, including at least 100 when the army stormed the flashpoint protest city of Hama to crush dissent on the eve of Ramadan, political activists say.
A witness in Deir ez-Zor told Al Jazeera that government forces launched fresh attacks on the town early on Monday morning.


"Military forces stormed the city from the west side and 25 people are killed and more than 65 injured," the witness said.
"Artillery and anti-aircraft weapons are being used. The situation in the city is very bad, and medical and food supplies are low."
Deir ez-Zor, Syria's main gas and oil-production hub in the east, has become a rallying point for protests along with Hama.
Sunday's attack on Hama was one of the "deadliest days" since the protests erupted, Rami Abdel Rahman, the head of the Britain-based Syrian Observatory for Human Rights, said.
Hama 'massacre'
Death tolls provided by the observatory and other human rights groups showed at least 142 people were killed across Syria, most of them falling in Hama.
"The number of those wounded is huge and hospitals cannot cope, particularly because we lack the adequate equipment," Abdel Rahman quoted a Hama hospital source as saying.
He said the crackdown on Hama came after more than 500,000 people rallied in the city on Friday following Muslim prayers during which a cleric told the congregation "the regime must go".

A resident from Deir ez-Zor said fresh attacks were launched on Monday morning

Western powers condemned the violence amid warnings from Berlin and Paris of fresh sanctions against the government of President Bashar al-Assad.
UN Secretary-General Ban Ki-moon called for an end to the violence and reminded Syrian authorities that "they are accountable under international human rights law for all acts of violence perpetrated by them against the civilian population".
Germany's UN Mission said late Sunday it has asked for a Security Council meeting on Syria and expects consultations to be held on Monday afternoon.
The Syrian authorities have consistently accused "armed gangs" and fundamentalist Salafist Muslims of stirring the unrest and aiming to sow chaos in the Sunni-majority country.
Residents in Hama said the army entered the city with tanks early on Sunday before gunfire erupted, in an apparent operation to wrest back control after security forces withdrew almost two months ago.
Syria has banned most foreign media and restricted coverage, making it difficult to confirm events on the ground.
But interviews with witnesses, protesters and activists painted a grim picture Sunday of indiscriminate shelling and sniper fire as residents fought back by erecting barricades and throwing firebombs at their assailants.
'Armed men'
The official SANA news agency said that gunmen shot dead two security forces in Hama while a colonel and two soldiers were "martyred" in Deir ez-Zor.
SANA said the gunmen torched police stations and attacked private and public property in Hama, adding that soldiers tore down barricades and checkpoints set up by the armed men at the city's entrance.


In 1982, an estimated 20,000 people were killed in Hama when the army put down an Islamist revolt against the rule of Assad's late father, Hafez.
Earlier this month, the president replaced the governor of Hama after a record 500,000 protesters rallied in the opposition bastion on July 1 calling for the fall of the regime.
The United States and France enraged the government earlier this month when their ambassadors travelled to Hama in a trip designed to demonstrate solidarity with demonstrators.
At least 1,583 civilians and 369 members of the army and security forces have been killed since mid-March in Syria, according to the observatory.