The United States managed to reach a bipartisan deal to raise the debt ceiling and avoid the country defaulting on its bills on Aug. 2, after weeks of fruitless negotiations in Congress.

"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," President Barack Obama said Sunday night.

The private negotiations that the White House started Saturday with the leader of the Republican Senate minority, Mitch McConnell, became the key for reviving a process marked by partisan obstructionism.

The accord, announced Monday by McConnell, will raise the debt ceiling enough so that it will not need to be raised again until the end of 2012 after the presidential elections.

According to the Republican leader, the plan calls for a deficit reduction of $3 billion over the next 10 years, in two phases and with the guarantee that no taxes will be raised, at least in the first stage.

"The first part of this agreement will cut about $1 trillion in spending over the next 10 years - cuts that both parties had agreed to early on in this process," Obama said.

The second part of the deal "establishes a bipartisan committee of Congress to report back by November with a proposal to further reduce the deficit, which will then be put before the entire Congress for an up or down vote. In this stage, everything will be on the table," the president said.

The full session of the Senate ended Sunday still with no decision on the debt plan proposed by the Democratic majority leader of that chamber, Harry Reid, who was unable to put an end to the eternal wrangling over his measure and put to a vote.

However, that did not keep Reid from announcing soon afterwards that he will support the plan arising from the negotiations between the White House and McConnell, as long as the rest of the Senate Democrats agree to back the measure.

Sen. Reid is supporting the agreement on the debt ceiling in hopes that the Democratic caucus will approve it, the majority leader's spokesman, Adam Jentleson, said in a statement.

The new agreement, according to sources close to the negotiations, takes elements both from Reid's plan and from that of House Speaker John Boehner, and will produce savings of $917 billion over the next 10 years and will raise the debt ceiling by $900 billion in two phases before the end of the year.

After an immediate reduction of the deficit of around $1 trillion, a new bipartisan committee in Congress will guarantee at least another $1.5 trillion off the deficit, Politico reported.

"Now, is this the deal I would have preferred? No. I believe that we could have made the tough choices required - on entitlement reform and tax reform - right now, rather than through a special congressional committee process. But this compromise does make a serious down payment on the deficit reduction we need, and gives each party a strong incentive to get a balanced plan done before the end of the year," Obama said.

On Tuesday the time limit expires for raising the debt ceiling that was set by the Treasury Department, which has warned that the government will then have gone over its debt limit of $14.29 trillion and consequently would be left without sufficient funds to pay all of its obligations.

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