Less than four hours before the midnight deadline, both chambers of the US Congress - the Senate and House of Representatives - passed the legislation by 81-18 and 285-144 votes respectively to prevent the catastrophic debt default and increase the current debt ceiling of USD 16.7 trillion.
    
President Obama immediately signed into law the bill, the "Continuing Appropriations Act, 2014," which provides fiscal year 2014 appropriations for projects and activities of the Federal Government through Wednesday, January 15, 2014.
    
"The effective time for the continuing resolution begins on October 1, 2013," White House Press Secretary Jay Carney said, adding that the law also extends the nation's debt limit through February 7, 2014.
    
Conceding defeat Republican House Speaker John Boehner said, "We fought the good fight; we just didn't win."

Though the passage of the legislation ends global anxiety as the default would have had cascading impact on the world economy, the bipartisan deal reached by the Republicans and the Democrats with the support of the White House buys time only for a few months, before which they need to renegotiate the issue and find a lasting solution to their differences.
    
Soon after Obama signed the bill, the White House Office of Management of Budget issued a notice to federal agencies asking nearly eight lakh furloughed employees to resume their duties on Thursday.


"Today, the President signed a continuing resolution that brings employees back to work and reopens many government functions. All employees who were on furlough due to the absence of appropriations may now return to work," Sylvia M Burwell, OMB Director, said in a memorandum.
    
The bill was passed hours before the US Government was to exhaust its borrowing capacity.
    
"This is good news for developing countries and the world's poor. The global economy dodged a potential catastrophe," said World Bank President Jim Young Kim, reflecting a sigh of relief.
    
IMF Managing Director Christine Lagarde said looking forward, it will be essential to reduce uncertainty surrounding the conduct of fiscal policy by raising the debt limit in a more durable manner.

In addition to lifting the USD 16.7 trillion debt limit, the bill approves the government funding through January 15. It also has provision for employees being paid for the period they were furloughed.

"We'll begin reopening our government immediately, and we can begin to lift this cloud of uncertainty and unease from our businesses and from the American people," Obama had earlier told reporters at the White House.
    
Obama said politicians in Washington have to "get out of the habit of governing by crisis." "Hopefully, next time, it will not be in the 11th hour," Obama told reporters, calling for both parties to work together on a budget, immigration reform and other issues.
    
As he left the podium, Obama was asked whether he believed America would be going through all this political turmoil again in a few months. He replied, "No."
    
The end to the fiscal impasse is being described in the US media as a defeat of the Republican party.
    
"Congressional Republicans conceded defeat on Wednesday in their bitter budget fight with President Obama over the new health care law," The New York Times wrote.
    
The heads of the Senate and House budget committees -
Democratic Sen. Patty Murray of Washington and GOP Rep. Paul Ryan of Wisconsin - will meet today with an eye on addressing these budget divides. They'll helm budget negotiations intended to come up with a broader spending plan for the rest of fiscal year 2014, which ends on September 30, a daily reported.
    
The shutdown have come at a steep cost, with Standard and Poor's putting it at USD 24 billion out of the economy.
    
The deal brought some relief to Wall Street as well as Washington, with pressure to resolve the impasse building with the approach of the Thursday deadline to raise the debt ceiling or face default.
    
US stocks rose on the news of an agreement, with the benchmark Dow Jones Industrial Average jumping more than 200 points on the day, a daily said.

Shutdown hurts growth, cost economy USD 24 billion

    
The US Government shutdown has cost the American economy more than USD 24 billion, ratings agency Standard & Poor's has said.
    
"The bottom line is the government shutdown has hurt the US economy," Standard and Poor's -- the eminent credit rating agency -- said in a statement.

S&P said the impact of the shutdown likely will take 0.6 percentage points off fourth-quarter growth and that would leave annualized growth in the October-December period at close to a sluggish 2 percent rate.
The rating agency noted that the deal reached tentatively yesterday only funds the government through January 15, and allows the government to keep borrowing funds until February 7.
    
That means the same economic woes that this most recent fight inflicted will be a threat again in relatively short order, it said warning that consumers could have a hard time regaining their momentum during that relatively short window.
    
"The short turnaround for politicians to negotiate some sort of lasting deal will likely weigh on consumer confidence, especially among government workers that were furloughed," S&P said.
    
"If people are afraid that the government policy brinkmanship will resurface again, and with it the risk of another shutdown or worse, they'll remain afraid to open up their checkbooks. That points to another Humbug holiday season," the credit rating agency said.
    
Earlier in the day, one of its top analyst said the economic impact of debt ceiling and government shutdown could be worse that the 2008 economic collapse.
    
"It would be worse than Lehman Brothers in my judgement, and I think it's needless," S&P analyst John Chambers said.
    
"We'll have to see what the government's response is. Our assumption is that there will be a plan, that's why we rated AA+ with a stable outlook. However the mere fact that we're having these discussions led us to conclude two years ago that it simply wasn't appropriate to have an AAA rating on the US government," Chambers said.

 

(Agencies)

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