Washington, August 1
US Congressional leaders rushed to line up Republican and Democratic votes today for a White House-backed deal to raise the US borrowing limit and avert an unprecedented debt default.

With scars still fresh from the months-long debate over increasing the $14.3 trillion debt ceiling, a new battle was shaping over the incendiary topic of taxes.

Votes were expected soon in the House of Representatives and Senate on a plan to cut at least $2.4 trillion over 10 years, form a new congressional committee to recommend a deficit-reduction package by late November, and raise the US borrowing limit through 2013.

Global markets showed signs of relief on Monday after becoming unnerved in recent days by the bitter deadlock in Washington. Without a deal by Tuesday, the United States, the world’s largest economy, would start running out of money to pay its bills.

US stocks rose more than 1 per cent at the open on Monday, while the US dollar rose modestly against the yen and the Swiss franc, a favored safe haven for nervous investors in recent weeks.

The Democratic-led Senate is expected to pass the deal, but it may face a harder path in the House of Representatives where both conservative Tea Party supporters and liberal lawmakers have expressed dissatisfaction with the agreement. But with the clock ticking away to the Tuesday deadline, there was a general feeling that the legislation would be approved and sent to President Barack Obama for his signature to finally close out a rancorous, partisan debate that left both sides fuming in the summer heat. Congressional leaders were consulting their membership to determine who would vote for the deal and who would be against it. Liberals have vowed to oppose it out of concern it would cut spending for popular social programs, while conservatives want deeper cuts.

Vice-President Joe Biden planned to attend Democratic meetings in the House and Senate, his office said on Twitter.