* Senate approves debt deal bill after House passage
* Markets wait for verdicts of ratings agencies
* Obama to sign deal into law, make statement
* Investor relief seen short-lived; more battles ahead
(Updates with Senate granting final approval to debt deal)
By Andy Sullivan and Donna Smith
WASHINGTON (Reuters) - Congress buried the specter
of a U.S. debt default by finally passing a deficit-cutting
package Tuesday, but the shadow lingered of a possible
painful downgrade of the top-notch American credit rating.
Just hours before the Treasury's authority to borrow funds
ran out, the Senate voted 74 to 26 to pass a hard-won
compromise to lift the government's $14.3 trillion debt ceiling
enough to last beyond the November 2012 elections.
President Barack Obama, who will seek a second term next
year, was expected to immediately sign the deal into law,
although without any White House ceremony.
His signature would draw the line under months of bitter
partisan squabbling over debt and deficit strategy that had
threatened chaos in global financial markets and dented
America's stature as the world's economic superpower.
There was little suspense about the outcome of the vote in
the Democratic-controlled Senate.
The bill overcame its biggest hurdle late Monday when
the Republican-led House of Representatives passed the $2.1
trillion deficit-reduction plan despite some resistance from
recalcitrant Tea Party conservatives and disappointed liberal
Deep uncertainty remained, however, over whether the budget
deal goes far enough in reining in deficits to satisfy major
ratings agencies, which have threatened to downgrade the United
States' AAA credit rating. Such a move would raise borrowing
costs and act as another drag on the stumbling economy.
Ratings agency Standard and Poor's said in mid-July there
was a 50-50 chance it would cut U.S. ratings in the next three
months if lawmakers failed to craft a meaningful
S&P could downgrade U.S. ratings soon after the bill is
signed by Obama, given that the agency will have all the
information it needs to make a decision.
Treasury Secretary Timothy Geithner said he expected the
ratings agencies to take a "careful look" at the situation but
he was not sure whether the United States would be spared from
"I don't know. It's hard to tell," he told ABC News.
Initial relief in financial markets over an end to the
gridlock quickly turned to concern Tuesday about risk of a
U.S. ratings cut as well concerns based on recent economic data
that growth could remain subdued. The major U.S. stock
exchanges were all down about half a percent in early trading,
and gold prices hit a new record high.
The plan calls for $2.1 trillion in spending cuts spread
over 10 years and creates a congressional committee to
recommend a deficit-reduction package by late November.
That appears to fall short of rating agency S&P's previous
assertion that $4 trillion in deficit-reduction measures would
be needed to avoid a downgrade by showing that Washington was
putting the country's finances in order.
(Additional reporting by Jeff Mason, Richard Cowan, Lauren
LaCapra in Washington and Chris Sanders in New York; Writing by
Matt Spetalnick and Pascal Fletcher; Editing by Jackie Frank)
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