Obama Signs Legislation To Avert Default

It isn't something that could wait until tomorrow -- not without risking a government default on its debts. So, President Barack Obama has signed the emergency legislation to raise the nation's borrowing limit, a little more than an hour after it won Senate approval.

It includes the demand from House Speaker John Boehner that any increase in the borrowing cap be matched by spending cuts. But it also meets demands from Obama, including debt-limit increases that would be large enough to keep the government funded into 2013.

Speaking in the Rose Garden a short time after the Senate approved it, Obama said the measure is just the first step to ensuring the country lives within its means.

Obama says lawmakers still need to find a balanced approach to reducing the deficit that includes some adjustments to Medicare and reforming the tax code so the wealthy pay more.

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The second-ranking Senate Republican says President Barack Obama insisted on potential defense cuts in the debt-limit bill that amounted to the "knowing destruction of the U.S. military."

Despite his fears about the bill, Sen. Jon Kyl of Arizona voted for the legislation to raise the nation's debt limit and avert a government default. Congress cleared the bill Tuesday and sent it to Obama, who signed it into law.

The bill calls for $350 billion in cuts in projected defense spending over 10 years. However, if a special House-Senate committee cannot agree on a deficit-reduction plan by year's end or Congress rejects its proposal, it would trigger some $500 billion in additional reductions in projected military spending.

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The bill to raise the country's borrowing limit and prevent a possible U.S. debt default passed in Congress. But it not enough for the U.S. to maintain its coveted AAA debt rating, according to Fitch Ratings.

On Tuesday, Fitch said the agreement was an important first step but "not the end of the process." The rating agency wants to see a credible plan to reduce the budget deficit.

David Riley, managing director at Fitch, told The Associated Press: "There's more to be done in order to keep the rating in the medium-term."

Fitch expects to conclude its review of the U.S. sovereign rating by the end of August. As the debt deal currently stands, it is possible the U.S. debt rating could be downgraded at that time, Fitch said.

Associated Press