Obama signs debt legislation

WASHINGTON -- With scant time to spare, President Barack Obama signed legislation yesterday to avoid an unprecedented national default that he said would have devastated the U.S. economy. But the truce with Republicans that defused the crisis seemed to be fading already.

Wall Street crumpled, dismayed by reports of new economic weakness and unimpressed by Congress' prescription.

The compromise deal to persuade GOP lawmakers to raise the federal debt limit -- U.S. borrowing was to collide with it at midnight -- will cut federal spending by $2.1 trillion or more over the next decade. But Obama immediately challenged Republicans to accept higher taxes on the wealthy in a second round of deficit cuts this fall. They adamantly refused to accept that idea during the past months' dispute.

A stern-faced Obama said at the White House that action to raise the debt limit had been essential but more -- and different -- steps were badly needed. "We've got to do everything in our power to grow this economy and put America back to work," the president said, arguing forcefully for including revenue increases as well as spending cuts in the next round of efforts to trim huge government deficits.

It was the same call the GOP successfully resisted in the bill just approved, and there was little evidence of a change in position.

"The American people agreed with us on the nature of the problem. They know the government didn't accumulate $14.3 trillion in debt because it didn't tax enough," said the party's leader in the Senate, Mitch McConnell of Kentucky.

Obama placed his signature on the bill in the privacy of the Oval Office less than two hours after a bipartisan 74-26 vote in the Senate. The House approved the measure Monday night on a 269-161 roll call that also reached across party lines and was sealed by a rap of the gavel by Speaker John Boehner.

The bill allows a quick $900 billion increase in borrowing authority as well as a first installment on spending cuts amounting to $917 billion over a decade.

Without legislation in place by day's end, the Treasury would have been unable to pay all the nation's bills, leading to a potential default for the first time in history. Administration officials warned of disastrous consequences for an economy that shows fresh signs of weakness on a near-daily basis as it struggles to recover from the worst recession in decades.

The White House and congressional leaders said legislation was important to reassure investors at home as well as overseas, and also to preserving the nation's AAA credit rating. Talk of that rating's precariousness continued nonetheless.

Treasury Secretary Timothy Geithner told ABC News Monday he doesn't know if the bruising debt-limit battle will harm America's Triple-A credit rating, but said he fears "world confidence was damaged by this spectacle."

Facts:

$900 BILLION: The increase the bill allows in quick borrowing authority.

$2.1 TRILLION: The amount in federal spending that will be cut over the next decade in the compromise deal.

$14.3 TRILLION: The amount of U.S. debt