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Updated: 2:27 p.m.
President Barack Obama signed into law a $2.1 trillion budget package Tuesday, capping months of grueling partisan wrangling that brought the nation to the brink of a historic default on its obligations.
Just two hours before the president signed the measure, the Senate voted, 74-26, to pass the bill, which will raise the debt limit and reduce the deficit. The final vote came with little of the drama that marked the last few weeks of negotiations that blew up again and again. However, the vote came just hours before the Treasury Department had warned the U.S. would default on its debt. The House passed the measure Monday, 269-161.
Though Obama relented this weekend to a deal with Republicans that requires no new tax revenue to help reduce the deficit, the president said Tuesday that he is still looking for the "balanced approach" to deficit reduction that he had originally sought. He said a new joint committee created by the law should institute changes to both entitlements, such as Medicare, and also to the tax code.
"I've said it before; I will say it again: We can't balance the budget on the backs of the very people who have borne the biggest brunt of this recession," Obama said. "We can't make it tougher for young people to go to college or ask seniors to pay more for health care or ask scientists to give up on promising medical research because we couldn't close a tax shelter for the most fortunate among us. Everyone is going to have to chip in. It's only fair. That's the principle I'll be fighting for during the next phase of this process."
Many Republicans chalked up the deficit reduction deal as an opening victory in their quest for smaller government, and it came despite having a Democrat in the White House and a Democratic majority in the Senate.
Senate Minority Leader Mitch McConnell (R-Ky.), who played a key role brokering the deal, said that far from showing dysfunction, it was a debate that "Washington very much needed to have."
McConnell said the debate will be a template for all future debt limit hikes.
"Never again will any president be allowed to raise the debt ceiling without being held accountable for it by the American people," he said.
Democrats grudgingly accepted a plan that includes no upfront revenue and significantly limits spending for the domestic spending programs they have championed, in return for avoiding a potentially catastrophic crisis.
"Our country was literally on the verge of a disaster," Senate Majority Leader Harry Reid said.
The Nevada Democrat hailed the bill as a compromise that would help reduce the deficit and stabilize the economy, but he expressed regret that Republicans would not consent to any tax increases as part of the package.