Washington: The US Congress is set to vote on a deal on Monday to raise the debt ceiling from USD 14.3 trillion and cut deficit by USD 2.4 trillion over 10 years, hours after President Barack Obama and Republican leaders reached a last-minute compromise that buoyed global markets.
Under the compromise proposal, which is set for debate and votes in the Senate and the House of Representatives, the US debt ceiling would rise by up to USD 2.4 trillion, averting a possible default on its debts.
The US government deficit will be cut by a similar amount over 10 years, and a special bipartisan committee will also be set up to suggest spending cuts.
Without a deal the US would face the prospect of an unprecedented default on its debts.
If the Congress fails to raise the current USD 14.3 trillion debt ceiling by tomorrow, Americans could face rising interest rates and a declining dollar, among other problems.
Financial experts have warned of a downgrade of America's triple-A credit rating and a potential stock market plunge.
The compromise deal follows several weeks of stop-and -start, high-stake negotiations and stern warnings from all sides about the calamitous effect of inaction.
Obama announced the deal in an unscheduled appearance in the White House briefing room yesterday.
"There are still some very important votes to be taken by members of the Congress, but I want to announce that the leaders of both parties in both chambers have reached an agreement that will reduce the deficit and avoid default," Obama said.