Leaders agree debt ceiling deal -- but Obama's crisis isn't over

US president announces deal that will raise debt ceiling and slash spending by trillions.

Barack Obama has announced that Republican and Democratic leaders have reached an agreement on raising the US debt ceiling by $900bn.

A second increase of between $1.2tn and $1.5tn would be available subject to a second vote of disapproval by Congress. In return for this increase in the government's borrowing limit, Congress will commit to deep spending cuts, reducing the deficit by a roughly equivalent amount over the next decade. A special bipartisan committee will be set up to agree areas to be cut.

The deadline for raising the debt cap -- currently at $14.3tn -- is tomorrow. While this deal marks a significant breakthrough after days of deadlock, it has yet to be voted on. Even as Obama announced the measures at the White House, the Speaker in the House of Representatives, John Boehner, was trying to sell the proposal to House Republicans. The hardline elements of his party are likely to vote against the bill, meaning that Boehner must make the deal sound appealing to Republicans without alienating the Democrats whose vote will also be needed to pass it.

Obama said that while it was not the deal he wanted, it would make a "serious down payment" on the deficit, and would prevent another crisis in a year's time. This is something Democrats were keen to avoid in the run up to the 2012 election.

While attention is now focused on getting the bill through the House in the face of intransigent right-wingers, many Democrats are also unhappy at the level of fiscal tightening the bill will involve. Mirroring the debate in Europe, economists have argued that slashing government spending at a time of dismal growth will depress the economy further.

In addition to this concern about the content of the bill are serious worries about the political message this debacle sends to the Tea Party representatives who precipitated, or at least worsened, the crisis. Obama's refusal to use legal manoeuvring to side-step the crisis -- or even to invoke the possibility to strengthen his bargaining position -- could well empower those set on derailing his presidency and blindly pursuing their own small-state agenda. Paul Krugman, describing the deal as an "abject surrender" by the President, expresses the view of many on the left:

Make no mistake about it, what we're witnessing here is a catastrophe on multiple levels.

It is, of course, a political catastrophe for Democrats, who just a few weeks ago seemed to have Republicans on the run over their plan to dismantle Medicare; now Mr. Obama has thrown all that away. And the damage isn't over: there will be more choke points where Republicans can threaten to create a crisis unless the president surrenders, and they can now act with the confident expectation that he will.

In the long run, however, Democrats won't be the only losers. What Republicans have just gotten away with calls our whole system of government into question. After all, how can American democracy work if whichever party is most prepared to be ruthless, to threaten the nation's economic security, gets to dictate policy? And the answer is, maybe it can't.

Both houses will vote on the deal today.

Samira Shackle is a freelance journalist, who tweets @samirashackle. She was formerly a staff writer for the New Statesman.

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“Why are you here?”: Juncker and MEPs mock Nigel Farage at the European Parliament

Returning to the scene of the crime.

In today's European Parliament session, Jean-Claude Juncker, president of the European Commission, tried his best to keep things cordial during a debate on Brexit. He asked MEPs to "respect British democracy and the way it voiced its view".

Unfortunately, Nigel Farage, UKIP leader and MEP, felt it necessary to voice his view a little more by applauding - the last straw even for Juncker, who turned and spat: "That's the last time you are applauding here." 

MEPs laughed and clapped, and he continued: "I am surprised you are here. You are fighting for the exit. The British people voted in f avour of the exit. Why are you here?"  

Watch the exchange here:

Farage responded with an impromptu speech, in which he pointed out that MEPs laughed when he first planned to campaign for Britain to leave the EU: "Well, you're not laughing now". Hee said the EU was in "denial" and that its project had "failed".

MPs booed again.

He continued:

"Because what the little people did, what the ordinary people did – what the people who’d been oppressed over the last few years who’d seen their living standards go down did – was they rejected the multinationals, they rejected the merchant banks, they rejected big politics and they said actually, we want our country back, we want our fishing waters back, we want our borders back. 

"We want to be an independent, self-governing, normal nation. That is what we have done and that is what must happen. In doing so we now offer a beacon of hope to democrats across the rest of the European continent. I’ll make one prediction this morning: the United Kingdom will not be the last member state to leave the European Union."

The Independent has a full transcript of the speech.

Now, it sounds like Farage had something prepared – so it's no wonder he turned up in Brussels for this important task today, while Brexiteers in Britain frantically try to put together a plan for leaving the EU.

But your mole has to wonder if perhaps, in the face of a falling British pound and a party whose major source of income is MEP salaries and expenses, Farage is less willing to give up his cushy European job than he might like us to think. 

I'm a mole, innit.