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House Speaker John Boehner of Ohio arrives on Capitol Hill AP Photo/Carolyn Kaster

US avoids default as last-minute deal is struck

Just 12 hours before the US defaulted on its debt, a deal has been reached, a Republican senator has said.

Updated 22.50pm

THE PROSPECT OF a catastrophic US default on its loans was averted today, as Senate leaders agreed a deal that will raise the debt ceiling and reopen the federal government.

Republican senator Kelly Ayotte told AP that a deal was done, but she would leave it to Speaker of the House John Boenher to announce it.

“I understand they’ve come to an agreement but I’m going to let the leader announce that.”

It is understood that the deal will see the US have authority to borrow through 7 February and will fund the government departments which had been closed up until 15 January.

The deal will be voted on in the House, will be sped through Congress and signed by President Barack Obama.

The deal comes just twelve hours before the deadline Treasury Secretary Jack Lew had set for Congress to raise the current $16.7 trillion debt limit. Without action by lawmakers, he said, Treasury could not be certain it had the ability to pay bills as they come due.

In addition to raising the debt limit, the proposal would give lawmakers a vote to disapprove the increase. Obama would have the right to veto their opposition, ensuring he would prevail.

House and Senate negotiators would be appointed to seek a deficit-reduction deal, but there is no provision for federal agencies to have increased flexibility in coping with the effects of across-the-board cuts.

The proposed changes to the Affordable Care Act, Obamacare, will only be altered in one small way. Under the deal, those seeking subsidies will have to undergo stricter income verification.

Markets

The New York Stock Exchange bounced back from yesterday’s losses by 200 points on foot of the news.

There had been dire warnings from the financial world a day after the Fitch credit rating agency said it was reviewing its AAA rating on U.S. government debt for possible downgrade.

John Chambers, chairman of Standard & Poor’s Sovereign Debt Committee, told “CBS This Morning” on Wednesday that a U.S. government default on its debts would be “much worse than Lehman Brothers,” the investment firm whose 2008 collapse led to the global financial crisis.

Billionaire investor Warren Buffett told CNBC he doesn’t think the federal government will fail to pay its bills, but “if it does happen, it’s a pure act of idiocy.”

AP contributed additional reporting

- First published 5.50pm

Read: Statue of Liberty and Grand Canyon to reopen

Read: With hours to go before deadline, US edges closer to shutdown deal

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65 Comments
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    Mute Janet Coyle
    Favourite Janet Coyle
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    Aug 16th 2015, 2:37 PM

    God Rest Him and Condolences to his family and friends it must be so hard for them when it’s so far away x

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    Mute Carmel Roselli- O'Keeffe
    Favourite Carmel Roselli- O'Keeffe
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    Aug 16th 2015, 10:03 PM

    Govan was an amazing talented footballer and chess-player from Portmarnock. The nicest and most humble family you could meet. Thoughts with his family-how terribly tragic and unfair. RIP

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    Mute Jim Kearney
    Favourite Jim Kearney
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    Aug 17th 2015, 9:20 AM

    Heard he was 1 in a Million. it’s always the good 1s.

    109
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    Mute Cupid Stunt
    Favourite Cupid Stunt
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    Aug 16th 2015, 4:33 PM

    poor guy, dying miles away from home,I hope his family get any help they need to get him back.

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    Mute fuve
    Favourite fuve
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    Aug 16th 2015, 6:24 PM

    Highly doubtful they will get any support at all. My little brother died in Australia suddenly and not one person gave my family any support from Ireland or Australia. The only helpful ones were the gardai from blessington station proper gents. They had to tell my mam. Irish embassy no help police in Australia proper gents and also helped her. She couldn’t fly over either because was the week of the volcano eruption in Iceland
    Airlines helped so much to trying to get her on flight. Cost my mam thousands to get my brother flown home. Not one Irish politician got in contact to offer assistance or condolences. Rest in peace poor lad deepest condolences to his family x

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    Mute John Payne
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    Aug 16th 2015, 9:22 PM

    Doesn’t surprise me in the slightest to be honest. By stating they are providing assistance, what they generally mean is that they have directed the relatives or concerned person towards the nearest embassy that Ireland has an agreement with, and that is as good as useless, from experience.

    Fact is, our passport is great when you travel, but shite when you need the government’s help (certain, well-known, exceptions noted). The U.S. Passport, and holder, while targeted in many places, is assured assistance throughout the world, albeit at a cost of paying taxes wherever you work….

    108
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    Mute Janet Coyle
    Favourite Janet Coyle
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    Aug 16th 2015, 8:58 PM

    Sorry to hear about your brother and shocking to hear the very little assistance you got at such a tragic and hard time x

    205
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    Mute fuve
    Favourite fuve
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    Aug 16th 2015, 10:50 PM

    Thanks Janet x if wasn’t for the decency of police on both sides and tireless efforts in helping our family I dread to think what would have happened. I hope this family get the assistance they need.

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    Mute Diana Moynihan
    Favourite Diana Moynihan
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    Aug 18th 2015, 7:59 AM

    Every parent’s worst nightmare, hope they find comfort in the fact that he was so happy travelling. It’s heartbreaking that he won’t get to tell them all about his adventure. Rest in Peace, sounds like you were one amazing guy

    2
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