Washington (CNN) - President Barack Obama signed into law Friday a record $1.9 trillion increase in the government's borrowing cap.
The legislation, which passed Congress largely along party lines, raises the debt ceiling to $14.294 trillion.
The measure also enacts a statutory pay as you go, or "pay-go," procedure requiring lawmakers to find ways to pay for proposed spending increases or tax cuts by offsetting them with higher taxes or reduced spending elsewhere in the budget.
The debt limit hike is expected to cover the Treasury's borrowing needs past the November mid-term elections and into 2011.
If the debt ceiling were ever breached, the country would effectively be in default. That would slam bonds, the dollar and creditors' portfolios.
Last week, Obama called the bill necessary to "help usher out an era of irresponsibility and begin putting the country back on a fiscally sustainable path."
Pay-go doesn't reduce the debt already accrued, but it would put the brake on future increases - a helpful first step, budget experts say.
The effectiveness of pay-go, however, depends on its parameters. The strongest form would not allow any policy to be exempt.
However, the pay-go measure now signed into law exempts some expensive measures, such as the cost of a permanent extension of middle class tax cuts.
It also would exempt the Medicare "doctor fix" for five years and the extensions of relief from the alternative minimum tax and the estate tax for two years.
Supporters of pay-go often credit the policy with helping the Clinton administration create an annual budget surplus after combating the country's annual deficits in the 1990s. But the pay-go law in place at the time did not exempt any expensive policies, said budget expert Charles Konigsberg, author of the book "America's Priorities."
–CNN's Jeanne Sahadi, Alan Silverleib, and Deirdre Walsh contributed to this report
Bring our troops home.
Cut the spending totally for two "wars" that were never declared.
It's time to stop Obama's out of controll spending yes Obama'a not Bush's. The libs still want to blame Bush for everything bad while no clue Obama is destroying this country.
What? Again!? But.., but didn't Nancy promise to balance the budget in her 2006 acceptance speech!!??
man, i wish I can set my own credit limit on borrowing.
BO fiddles while Rome burns! If his naivety and radicalism wasn't so costly for America and the rest of the world, it would be just a joke! :(
Obama will be raising the limit every year until we are bankrupt unless he brings the out of control spending under control now. So far deficit reduction has just been talk in his never ending campaign.
OH NOES!!! Next weeks "big" news: 5 straight days of the Teatards pitching a collective pant-filling conniption fit over this. DO NOT BE FOOLED by the masturbatory "fiscal responsibility" blather we're going to hear from the right.
THIS IS THE REASON THE GOP HATES IT:
"The measure also enacts a statutory pay as you go, or "pay-go," procedure requiring lawmakers to find ways to pay for proposed spending increases OR TAX CUTS by offsetting them with higher taxes or reduced spending elsewhere in the budget."
All you have to do to understand why this angers them is look at exactly what Bush did on their watch...nay, with their rabid blessing: cut taxes and increased spending/borrowing.
It is a shame to have to include the cost of the chicken hawk's unnecessary war in Iraq. Certainly the party of war knows there would be an increase in the budget when the cost of the war was no longer hidden.
one thing this country will never runout of is that free obama money.
It's a start.
The 'pay-go' seems to be a great idea, but let's just see how the GOP is going to bash it... Every idea of the POTUS (even those that they supported previously), no matter how good or how bad, is bashed the same way...
Obama's like a crackhead with a found gift card...spend..spend...spend....oh, and let's not forget to make more government jobs....
same old tax, spend and borrow liberal!
I smell the a serious odor coming from DC.Both parties are taking their curtain call and hurrying to spend some cash while the spendings good.It should help the economy for a while though.
How ridiculous with all this spending and yet people are struggling in business and keeping their jobs. Did Obama learn anything while he was in Harvard????
to hell with both Republicans and Liberals!
Oh but the Republicans HATE Pay As You Go! No wonder it passed "Congress largely along party lines". Of course the Rabid Right can't pause for one fraction of a second in their irrational hatred of President Obama to let it sink in that THIS IS A GOOD THING!
What a concept? Budgeting expenses as you go along and only doing what you can afford. It's what the rest of America does.
OMG ! this is six generations of enslavement to what is suppose to be the people's government.
Unacceptable! My fellow Americans we have to vote them out! We are enslaving our great great gandchildren to a Plutocracy.
Vote Congress out, “you are fired” if they are in. Vote them out this fall no matter what party they belong to, and in the next election and every election going forward until they become the servants of the people once more.
Like this was a surprise to everyone, has he vetoed anything yet? If he has I haven't heard about it.
Odumbo is like a chick in a mall with a no limit credit card. At least he could make it look like he was trying to save money.
2010/2012 REAL Change is coming
Yeah you Neo-CONfederates need to get educated with the facts...
Obama is paying for the Wars which accounts for a huge part of the debt unlike Bush whom just charged it all to the national credit card and pretended like it was free. Either pay for it or cut it. You can't have it both ways.
Apparently he never met a spending bill he didn't like.
The $1.9 trillion was due to the stimulus spending in 2009 to prevent us from slipping into a great depression. Unfortunately, Congress (Both Dems and Republicans) refuses to enact taxes to pay for the wars and/or begin seriously looking at privatizing Medicare.
@ – Orange Curtain, CA
Yeah, us Johnny reb rednecks are going to take some financial tutorin' from a Californian....you guys really have a good hold on your finances.....what's that? You're thanking the rest of the nation for AGAIN, bailing you out?
I wonder when our lenders are going to wake up and stop buying bonds from the Gov. Thats going to be an awesome party when the streets are burning and people are rioting
President Obama promised the American people that he would "change" America and the world, not "fixed" it. When you can't fix it, just change it.