United States loses prized AAA credit rating from S&P

The United States lost its top-tier AAA credit rating from Standard & Poor's on Friday in an unprecedented blow to the world's largest economyin the wake of a political battle that took the country to the brink of default.

S&P cut the long-term U.S. credit rating by one notch to AA-plus on concerns about the government's budget deficit and rising debt burden. The action is likely to eventually raise borrowing costs for the American government, companies and consumers.

"The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government's medium-term debt dynamics," S&P said in a statement.

The outlook on the new U.S. credit rating is "negative," S&P said in a statement, indicating another downgrade was possible in the next 12 to 18 months.

The move reflects the deterioration in the global economic standing of the United States, which has had a AAA credit rating from S&P since 1941, and it could have implications for the U.S. dollar's reserve currency status.

"The global system must now adjust to the many implications and uncertainties of the once-unthinkable loss of America's AAA," said Mohamed El-Erian, co-chief investment officer at Pacific Investment Management Co which oversees $1.2 trillion in assets.

The outlook on the new U.S. credit rating is "negative," S&P said in a statement, indicating another downgrade was possible in the next 12 to 18 months.

The decision follows a fierce political battle in Congress over cutting spending and raising taxes to reduce the government's debt burden and allow its statutory borrowing limit to be raised.

On August 2, President Barack Obama signed legislation designed to reduce the fiscal deficit by $2.1 trillion over 10 years. But that was well short of the $4 trillion in savings S&P had called for as a good "down payment" on fixing America's finances.

The political gridlock in Washington over addressing the long-term fiscal problems facing the United States came against the backdrop of slowing U.S. economic growth and led to the worst week in the U.S. stock market in two years.

The S&P 500 stock index fell 10.8 percent in the past 10 trading days on concerns that the U.S. economy may be heading into another recession and because the European debt crisis has worsened.

Treasury bonds, once indisputably seen as the safest security in the world, are now rated lower than bonds issued by countries such as Britain, Germany, France or Canada.

U.S. TREASURY QUESTIONS CALCULATION

Obama was briefed earlier in the day regarding S&P's intentions, but discussions only took place with Treasury officials and did not include the White House, a source familiar with the discussions told Reuters.

Late on Friday, the Treasury said the rating agency's debt calculations were wrong by some $2 trillion.

S&P confirmed it changed its economic assumptions after discussion with the Treasury Department but said it did not affect its decision to downgrade.

"We take our responsibilities very seriously, and if at the end of our analysis the committee concludes that a rating isn't where we believe it should be, it's our duty to make that call," David Beers, head of sovereign ratings at S&P, told Reuters.

The theme running throughout S&P's analysis is the breakdown in the ability of the Democratic and Republican parties to govern effectively.

The agency said that policymaking and political institutions had weakened in the past few months "to a degree more than we envisioned." This has major implications for the nation's budget and debt problems.

For example, S&P now assumes that tax cuts brought in under President George W. Bush in 2001 and 2003 would not, as planned, expire by 2012 because of staunch Republican opposition to any measure that would raise revenues.

The compromise reached by Republicans and Democrats this week calls for creation of a bipartisan congressional committee to find $1.5 trillion of deficit cuts by late November, beyond the $917 billion already identified.

'DAUNTING' IMPLICATIONS

While the downgrade is a blow to U.S. prestige, it was largely expected and may not have a big impact on trading of U.S. Treasuries and other assets when markets reopen in Asia on Monday.

In fact, Treasuries have rallied this week, driving the yield on the benchmark 10-year note to 2.34 percent, its lowest level in about 10 months. This reflects a belief among investors that U.S. government debt is still a safe bet at a time when prices of stocks and commodities are falling on concern about slowing global economic growth.

"To some extent, I would expect when Tokyo opens on Sunday, that we will see an initial knee-jerk sell-off (in Treasuries) followed by a rally," said Ian Lyngen, senior government bond strategist at CRT Capital Group in Stamford, Connecticut.

But the downgrade has implications for the country's financial sector, ranging from insurance companies to government-related firms such as housing financiers Fannie Mae and Freddie Mac.

"At least initially, the impact on the market will be negative because there will some forced liquidation of U.S. assets," said Boris Schlossberg, GFT director of currency research.

The downgrade could add up to 0.7 of a percentage point to Treasuries' yields over time, increasing funding costs for public debt by some $100 billion, according to SIFMA, a U.S. securities industry trade group.

The Federal Reserve and other bank regulators moved on Friday to reassure global markets that the downgrade would not mean that additional capital would be needed by banks and other institutions holding Treasury securities.

The Fed also said the cut would not impact the operation of its emergency lending window for banks, nor its buying and selling of Treasury securities to conduct monetary policy.

The impact of S&P's move was tempered by Moody's Investors Service's decision earlier this week confirming, for now, the U.S. Aaa rating. Fitch Ratings said it was still reviewing its AAA rating and would issue its opinion by the end of the month.

S&P's move is also likely to concern foreign creditors especially China, which holds more than $1 trillion of U.S. debt. Beijing has repeatedly urged Washington to protect its U.S. dollar investments by addressing its budget problems.

"China will be forced to consider other investments for its reserves. U.S. Treasuries aren't as safe anymore," said Li Jie, a director at the reserves research institute at the Central University of Finance and Economics.

One currency strategist, however, did not think there would be wholesale selling by foreigners.

"One of the reasons we don't really think foreign investors will start selling U.S. Treasuries aggressively is because there are still few alternatives to the Treasury market in terms of depth and liquidity," said Vassili Serebriakov, currency strategist at Wells Fargo in New York.

He said there was likely to be weakness in the U.S. dollar but a sharp sell-off was unlikely.

S&P had already placed the U.S. credit rating on review for a possible downgrade on July 14 on concerns that Congress was not adequately addressing the fiscal deficit of about $1.4 trillion this year, about 9.0 percent of gross domestic product, one of the highest since World War II.

But Obama administration officials grew increasingly frustrated with the rating agency during the debt limit debate and accused S&P of moving the goal posts in its downgrade warnings, sources familiar with talks between the administration and the agency have said.

The downgrade was immediately pounced on by candidates vying for the Republican presidential nomination. Mitt Romney said the move was "a deeply troubling indicator of our country's decline under President Obama," while Jon Huntsman said it was due to spreading of a "cancerous debt afflicting our nation."

The downgrade, 15 months before the next presidential election, and debt will be top campaign issues.

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'Total System Collapse' Marc Faber Plus Silver Price Update From James Turk And Eric Sprott

Marc Faber: Brace for a Global 'Reboot' and a War

The EPIC Weekend has Arrived!

The next installment from your favorite bears on the Silver & Gold manipulation.

Parts 1- 6 can be seen here http://www.youtube.com/user/MrSilvergoldsilver


This weekend will be a key indicator for the launch of QE3 on tuesday or the markets go to zero. Its The ben bernank's choice now. After this week of blood shed in the markets, we will see if this was the catalyst for the money printing to start (or quantitative easing sorry) because if its not, we hope you are prepared.

Man the Life Boats

In an appearance at the Casey Research Spring Summit, Michael Maloney takes a look at the recent contraction of the money supply—it’s not pretty.

“This is an emergency – there’s something going wrong here,” Mike tells the crowd.

The dilemma of the U.S. Federal Reserve is that it’s damned if it does, damned if it doesn’t:

“If they end quantitative easing, it’s going to go into deflation—a huge implosion. If they continue it, the dollar continues losing value, and we go into a crisis of confidence… Any way this turns out, the dollar is going to go into a crisis of confidence. There’s no escaping that; you can’t do what they’ve done to the monetary system over these years, you can’t cheat gold the way they have done, and not have it come back to haunt you someday. “

Mike goes on to look at the money supply, particularly the part of the money supply represented by debt. (Remember, the growth of our global economy depends on continual borrowing.) See the GoldSilver.com knowledge centerwebinar for the charts Mike talks about. 

“The reason the Fed is panicked and inflating the money supply is because of this,” Mike says. “Deflation is [Fed Chair] Ben Bernanke’s worst nightmare, and it’s happening right now.”

The portion of the money supply represented by debt has collapsed by more 12 percent in the past few months. Real estate loans at all commercial banks, collapsing. Total revolving credit, collapsing—by 20%, Mike continues, based on the Fed’s own data.

“From World War II to today, this has never happened before. This hasn’t happened since the onset of the Great Depression. These are alarm bells going off saying that you’d better man the life boats.”


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Drunken Ben Bernanke Tells Everyone At Neighborhood Bar How Screwed U.S. Economy Really Is

Claiming he wasn't afraid to let everyone in attendance know about "the real mess we're in," Federal Reserve chairman Ben Bernanke reportedly got drunk Tuesday and told everyone at Elwood's Corner Tavern about how absolutely fucked the U.S. economy actually is.

Bernanke, who sources confirmed was "totally sloshed," arrived at the drinking establishment at approximately 5:30 p.m., ensconced himself upon a bar stool, and consumed several bottles of Miller High Life and a half-dozen shots of whiskey while loudly proclaiming to any patron who would listen that the economic outlook was "pretty goddamned awful if you want the God's honest truth."

"Look, they don't want anyone except for the Washington, D.C. bigwigs to know how bad shit really is," said Bernanke, slurring his words as he spoke. "Mounting debt exacerbated—and not relieved—by unchecked consumption, spiraling interest rates, and the grim realities of an inevitable worldwide energy crisis are projected to leave our entire economy in the shitter for, like, a generation, man, I'm telling you."

Enlarge ImageA drunken Bernanke attempts to find the Aerosmith song "Back In The Saddle" on the bar jukebox.

"And hell, as long as we're being honest, I might as well tell you that a truer estimate of the U.S. unemployment rate is actually up around 16 percent, with a 0.7 percent annual rate of economic growth if we're lucky—if we're lucky," continued Bernanke, nearly knocking a full beer over while gesturing with his hands. "Of course, if everybody knew that, it would likely cripple financial markets across the entire fucking globe, even in various emerging economies with self- sustaining growth."

After launching into an extended 45-minute diatribe about shortsighted moves by "those bastards in Congress" that could potentially exacerbate the nation's already deeply troublesome budget imbalance, the Federal Reserve chairman reportedly bought a round of tequila shots for two customers he had just met who were seated on either side of him, announcing, "I love these guys."

Numerous bar patrons slowly nodded in agreement as Bernanke went on to suggest the United States could pass three or four more stimulus packages and "it wouldn't even matter."

"You think that's going to create long-term economic growth, let alone promote job creation?" Bernanke said. "We're way beyond that, my friend. There are no jobs, okay? There's nothing. I think that calls for another drink, don't you?"

While using beer bottles and pretzel sticks in an attempt to explain to the bartender the importance of infusing $650 billion into the bond market, the inebriated Fed chairman nearly fell off his stool and had to be held up by the patron sitting next to him.

Another bargoer confirmed Bernanke stood about 2 inches from her face and sprayed her with saliva, claiming inflation was going to "totally screw" consumer confidence and then asking if he could bum a smoke.

"Sure, we could hold down long-term interest rates and pursue a program of quantitative easing, but c'mon, we all know that's not going to make the slightest bit of difference when it comes to output, demand, or employment," Bernanke said before being told to "try to keep [his] voice down" by the bartender. "And trust me, with the value of the U.S. dollar in the toilet, import costs going through the roof, and numerous world governments unprepared for their own substantial debt burdens, shit's not looking too good for us abroad, either."

"God, I'm so wasted," added Bernanke, resting his head on the bar.

Later in the evening, Richard Kampman, a truck driver who was laid off in 2010, said Bernanke approached him in the men's restroom and attempted to strike up a conversation about various factors contributing to the current financial crisis.

"He stumbled up to the urinal and started mumbling on about the depressed housing sector or something," said Kampman, who claimed Bernanke had to use both hands on the wall to steady himself. "Then after a while he just sort of stopped and I couldn't tell if he was laughing or crying."

"Then he puked all over the sink and the mirror," Kampman added.

Customers at the bar told reporters the "shitfaced" and disruptive Bernanke refused to pay for his drinks with U.S. currency, claiming it was "worthless." Witnesses also confirmed that near the end of the evening, Bernanke put money into the jukebox and selected Dire Straits' "Money For Nothing" to play five times in a row.

"This is what it's all about," said Bernanke, who reportedly danced alone in the middle of the dark tavern. "Fucking love this song."

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Gold Rallies to Record as Economic Concerns Spur Investor Demand for Haven

Gold futures rose to a record $1,675.90 an ounce on signs that theU.S. economy is faltering amid debt woes, boosting demand for the precious metal as an investment haven.

Moody’s Investors Service said the U.S. credit rating may be downgraded and yesterday placed the country on negative outlook after President Barack Obama signed into law a plan to lift the nation’s borrowing limit and cut spending. Gold priced in euros also reached a record on concern that slowing growth will hamper efforts by Spain and Italy to trim debt.

“People want gold for safety,” Frank Lesh, a trader at FuturePath Trading LLC in Chicago, said in a telephone interview. “People are running away from currency volatility, economic weakness and political instability. Gold is an international currency, and no government can print any of it.”

Gold futures for December delivery rose $21.80, or 1.3 percent, to settle at $1,666.30 at 1:42 p.m. on the Comex in New York.

Silver, gold and cattle were the only commodities to post gains among 19 raw materials in the Thomson Reuters/Jefferies CRB Index. The Dow Jones Industrial Average headed for the ninth straight decline, the longest slump since 1978.

This year, gold has climbed 17 percent. The Federal Reserve has kept borrowing costs near zero percent since December 2008 and completed two rounds of so-called quantitative easing to help bolster the economy.

No Vacation

European leaders last month agreed on a second bailout for Greece. Spanish Prime Minister Jose Luis Rodriguez Zapatero returned to Madrid to discuss the escalating debt crisis with ministers, less than a day after departing for a vacation.

“A barely expanding U.S. economy and its implications for the world are now at the forefront of investors’ minds,” Edel Tully, a London-based analyst at UBS AG, said today in a report. “Neither European nor U.S. debt issues have been comprehensively dealt with. Data since last Friday have increased expectations for further quantitative easing” by the Fed, she said.

Yesterday, holdings in exchange-traded products backed by gold rose 20.3 metric tons to a record 2,173.9 tons, data compiled by Bloomberg show.

Silver futures for September delivery rose $1.666, or 4.2 percent, to $41.758 an ounce on the Comex, the biggest gain since July 13. The price has climbed 35 percent this year.

Palladium futures for September delivery fell $31.80, or 3.8 percent, to $795.10 an ounce on theNew York Mercantile Exchange. Platinum futures for October delivery slid $8.50, or 0.5 percent, to $1,785 an ounce.

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Gold keeps motoring with a 'long way to go'

Fears that the gold price would tank by as much as $US100 an ounce in response to the US debt ceiling deal have proved groundless, giving delegates at the Diggers & Dealers bash another excuse for some late night revelry.
Gold did drop about $US20 an ounce on news of Monday’s agreement but has since motored right back to where it was. And if the bar talk in Kalgoorlie is on the market, it will be going higher still.
Alacer Gold’s straight-talking chief executive Ed Dowling Gold is one of those tipping gold has got a long way to go.
He told Garimpeiro that all that has been achieved with the debt ceiling deal is a slowing down in the trajectory of America’s debt. ''I mean, we still borrow 40 cents of every buck that we spend in the US.''
''So the debt is not coming down. It’s getting bigger. It’s just getting less big. So $US1800 gold by year-end for sure. Probably $US2000 next year. But I hope it’s not Pierre Lassonde’s prediction that the gold price and the Dow Jones (circa 12,000 points) will be the same.''
Dowling, who hails from Denver, said while thumping gold prices are obviously good for the gold industry, his personal hope is that it does not go to $US5000 an ounce because my friends, we’re all in trouble if it does.


N.B The below stocks refer to the Australia Stock Exchange.

Royalco Resources
The boys from the Sydney-based Kingsgate are pleased as punch with the group’s acquisition of the Bowdens silver project near Mudgee.
It comes with a silver resource of about 100 million ounces, or a 127 million ounces if you give the by-product metals in the deposit a silver value.
Kingsgate is as keen as mustard to get Bowdens – originally a Rio Tinto find but being acquired from Canada’s Silver Standard Resources for $75 million - into production by early 2014.
Melbourne-based royalty holder and gold/copper explorer Royalco Resources is cheering Kingsgate on.
About 10 years ago it picked up a swag of royalties from Rio Tinto, one of them being a sliding royalty on Bowdens.
Nothing happened at Bowdens for so long that Royalco kind of forgot that it held the royalty. It sure knows it has got it now, given the royalty has a net present value around the $15-$20 million mark, based on various assumptions.
The royalty is two per cent on revenues up to $5 million and 1 per cent beyond that, for as long as Bowden produces.
The suggested NPV makes for interesting reading when stacked up against Royalco’s current market capitalisation of $21 million (42 cents a share), remembering on the way through that Royalco is holding some $15 million in cash accumulated from its ''live'' royalties elsewhere.
On the expectation that the Bowdens royalty generates some $2 million a year, Royalco’s ability to continue to pumpoput dividends (4 cents a share fully franked annually) while also exploring for copper/gold at various overseas locations is now more guaranteed than it was.

Metminco Ltd:
The West Australians spruik their wines as loudly as their mines, so Metminco's Phil Wing caused a stir when he told a bunch of them he might bring along a few bottles of decent South American stuff for Diggers & Dealer next year.
His Latin loyalties are understandable, given the Peruvian Government last month declared Metminco's Los Calatos copper venture a "project of national significance," allowing the ASX and AIM listed company to gain surface access rights to government-held land without going to auction as normally required.
The decision also demonstrated that after the initial panic following the presidential election victory of the supposedly anti-mining Ollanta Humala, Peru is doing what it can to show it is pretty much business as usual.
That has yet to be fully reflected in Metminco’s share price which got beaten up when Humala won the day, falling to as low as 23 cents a share from the 40 cent-plus mark. It last traded at 29.5 cents.
Metminco is banking on a strong news flow in the months ahead to get the full recovery in its share price, if not more.
Metminco is already sitting on something like 4.7 million tonnes of copper metal at Los Calatos but the expectation is that the current drilling program will demonstrate that it is much bigger.
While Los Calatos is obviously the jewel of Metminco's portfolio, Wing is also excited about the potential of Metminco’s gold and copper prospects in neighbouring Chile.
In fact it is one of those Chilean copper/gold projects that just might give Metminco its first production. Just recently Metminco commissioned a drilling program at the Mollacas, Vallecillo and Camaron projects in Chile.


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Debt ceiling deal accomplishes little

For all the drama, the compromise achieves little in the short term and only delays what most see as the country's key financial decision: whether to raise taxes or reduce Medicare.

Vice President Joe Biden arrives at the Senate to help finalize the debt deal. (J. Scott Applewhite, Associated Press / August 2, 2011)

 

Reporting from Washington—

High-stakes negotiations force people to reveal what they really care about, and in the 11th-hour deal to stave off a federal financial default, President Obama and congressional Democrats and Republicans each made clear their top priorities.

For Republicans, it was preventing any tax increase to upper-income families.

For Democrats, it was ensuring no cuts to Social Security, Medicaid and a handful of other programs that aid the elderly and the poor.

And for Obama, it was getting a deal that would end the threat of an economy-shaking default until after the 2012 presidential election.

None of the key players was willing to go all out to actually solve the nation's long-term financial problems. As a result, the deal doesn't.

"In reaching this agreement, each political party yielded to the other party's highest-priority political and ideological interest," and fails to resolve the country's long-term budget problems, Sen. Joe Lieberman (I-Conn.) said Monday.

Indeed, for all the high-stakes political drama and the apparent damage the months-long debate has inflicted on the political standing of both parties and the president, the compromise — what White House officials refer to as a "lowest common denominator" deal — achieves relatively little in the short term.

Over the next two years, the final compromise comes very close to the initial request by Obama — a "clean" debt ceiling increase that allows the government to pay its bills and does nothing else.

In the government's 2012 fiscal year, the cut would be $21 billion, or less than 1% of a nearly $3.7-trillion federal budget, according to the Congressional Budget Office.

The bulk of the projected $2.1 trillion or more of cuts does not start kicking in until after the next election when a future Congress and president could choose to rewrite the plan — a point that many conservatives have worried about.

"Enforcement is the key to whatever we do. It's always in the out years and it never happens," said Sen. Michael D. Crapo (R-Idaho), using the budget lingo for the latter years of a long-term deal.

The bill almost certainly defers until after next year's election the central choice most budget experts say the country eventually must make: higher taxes or deep cuts in Medicare, the nation's huge and fast-growing health program for the elderly.

"We missed a great opportunity," Rep. Steny H. Hoyer, the second-ranking Democrat in the House, said during Monday's debate.

A bipartisan congressional committee set up by the compromise bill is supposed to grapple with the long-term choices over the next four months. White House officials insist they see that panel as a serious opportunity to try again for a major deficit reduction deal. Their hope is that members of both parties will back an agreement rather than accept automatic across-the-board cuts in defense and domestic agency budgets.

But many in Congress, whose leaders will appoint the panel's 12 members, believe the panel more likely will deadlock.

"I think it's very possible, maybe even probable, that with a committee you're going to have a 6-6 vote," said Sen. Saxby Chambliss (R-Ga.).

To protect their top priorities in case those cuts do take effect, all the major players were willing to give up other goals they had sought.

Republicans have long championed spending for the military, but given the choice between protecting the Pentagon budget and avoiding new taxes, they agreed to a potential long-term cut in defense spending that would be significantly deeper than Obama has supported. The cut, about $540 billion over a decade, would require the Pentagon to consider shrinking the active-duty Army, reducing the Navy's 11 aircraft carriers or dropping Air Force plans to buy a new long-range bomber, analysts said.

Democrats, whose hand in the negotiations was strengthened when conservative Republicans refused last week to back a debt ceiling bill in the House, agreed to big cuts in federal agency budgets. But they held fast on Medicaid, the joint federal-state program of medical insurance for the poor. Only a few weeks ago, the program seemed doomed to major cuts that the White House had indicated it could accept as part of a broader deal.

But liberal interest groups rallied to support the program, winning key support from Gene Sperling, the head of Obama's National Economic Council, according to participants in the final negotiations. And House Minority Leader Nancy Pelosi (D-San Francisco) made clear that Democrats would not vote for a compromise plan that included a Medicaid cut, said Rep. Henry A. Waxman (D-Beverly Hills), the party's leading expert on the program.

As for the White House, officials had spent weeks seeking a "grand bargain" that would cut the long-term deficit by some $4 trillion over the decade. But when House Speaker John A. Boehner (R-Ohio) pulled the plug on those negotiations and introduced a bill that would require a second congressional vote on the debt near Christmas, the priority changed.

"The country and our economy could not go through this debate again in a short four or five months," a senior White House official told reporters. "So that was the president's very important priority, and that's accomplished as a result of this agreement."

But what the agreement leaves unaccomplished will remain high on the agenda of whoever is elected president in November 2012. The George W. Bush-era tax cuts will expire barely two months after the election, virtually guaranteeing a new debate over taxes. And whoever takes the oath of office in January 2013 will inherit a debt still rising and another debt ceiling vote just a few months away.

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Debt Limit Deal is a 'Sugar Coated Satan Sandwich'

The House passed a bill on Monday evening to cut spending by $2.1 trillion and raise the debt ceiling until 2013, just one day before the Aug. 2 deadline for the government to begin defaulting on its loans.

The deal passed mostly on the back of House Republicans, with 269 votes for the deal and 161 against it. Among the 240 Republicans, 174 supported the bill.

House Democrats were furious, with some members calling the bill a "Satan sandwich" and most of the Congressional Progressive Caucus vowing to vote against it. In the end, however, 95 Democrats voted to support the bill, including Rep. Gabrielle Giffords (D-Ariz.), who is recovering from a gun shot wound.

By approving the bill, which should easily pass the Senate on Tuesday, the House allowed the government to avoid a historic default on the nation's loans. But first, it had to anger plenty of progressives on the left and Tea Partiers on the right, both of whom opposed the deal.

Leadership on both sides insisted that though the deal was not perfect, it made the best of a difficult situation. With the House led by Republicans and the Senate and White House led by Democrats, Congress was gridlocked for months over how to raise the debt ceiling, with congressional Republicans walking away from the negotiating table multiple times.

By Sunday, when a deal had been cemented, House Speaker John Boehner (R-Ohio) faced a tough task: selling the bill to his conference, many of whom have opposed raising the debt limit unless tied to passage of a balanced budget amendment. Conservative members of the House GOP conference revolted against a debt ceiling plan presented by Boehner last week, forcing him to revise the bill's provision on the balanced budget amendment at the last minute to win more votes.

The final deal includes a requirement to vote on the balanced budget amendment, making it more like the original Boehner bill. But he insisted to his members that it brought them closer to passage of the amendment than ever before.

"This gives us the best shot that we've had in the 20 years that I've been here," Boehner said at a press conference Monday.

House Republican leaders also said the bill was a "big win" because it does not include revenue-increasing measures, such as tax hikes for the wealthy or closing loopholes for corporations.

"I think the big win here for us and for the American people is that there are no tax hikes in here," House Majority Leader Eric Cantor (R-Va.) said.

Democrats, meanwhile, worried the bill was going too far by cutting spending and putting economic recovery at risk. Hours ahead of the vote, scores of Democrats left a caucus meeting fuming about the deal not reflecting any of their priorities, namely preserving entitlement programs and closing corporate tax loopholes.

"We ceded the whole moral ground on billionaires paying their fair share," said Rep. Eliot Engel (D-N.Y.).

Engel questioned why any Democrats should vote for a deal that could ultimately "decimate Medicare" and that hands big wins to Republicans while "taking for granted" Democratic votes. The bill will establish a "super Congress" that will be tasked with finding savings from entitlement programs, risking major, filibuster-proof changes to those programs. 

"You know what we got? We avoided default. I'm glad we avoided default," said the New York Democrat. "But if you had told me that this would be the package a month ago, I would have asked you what you had been smoking."

Asked what she thinks of the deal, Del. Eleanor Holmes Norton (D-D.C.) replied, "I don't think. I cry."

Rep. Jim Moran (D-Va.) called the bill "terrible" and predicted it would lead to another 1 million private sector jobs lost. The bill cuts $917 billion from the deficit over the next decade, with billions coming in the first two years. 

At the same time, Democrats said they struggled with wanting to support Obama's efforts. "It's our conscience versus our president," said Rep. Steve Cohen (D-Tenn.). "It's a bitch."

By and large, Democrats headed into the vote ready for Boehner to take responsibility for securing votes since the bill was largely driven by extremist lawmakers in his party.

Even House Minority Leader Nancy Pelosi (D-Calif.) said it was up to Boehner to whip his members into passing the bill. Asked if she though the House had the votes, Pelosi told reporters, "You'll have to ask the Speaker. He's in the majority."

In the end, however, Pelosi held her nose and voted for the bill, along with House Minority Whip Steny Hoyer (D-Md.).

In the Senate, many Democrats are expected to do the same.

"It's a very hard compromise for people, but we recognize, I think a majority of us, the alternative is calamitous," said Sen. Dianne Feinstein (D-Calif.), summing up the thinking of many of her colleagues after Biden made his pitch to them. "I think this becomes a settlement of necessity rather than a settlement of favor."

Still, some members of the caucus remained adamantly opposed even after Biden's visit.

"There is deep disappointment by the American people that at time when the rich are becoming much richer and there are corporations making billions in profits and not paying a nickel in taxes that deficit reduction is taking place on the backs of children and the elderly, the sick and the poor," said Vermont Sen. Bernie Sanders. "I think that that is a very unfortunate circumstance and I'm certainly not going to vote for it."

Sen. Frank Lautenberg (D-N.J.) said he'd vote against the bill, arguing that its cuts would inevitably come from programs that help the poor put food on the table and heat their homes, or would be aimed at federal agencies that Republicans don't like, such as the EPA.

"The people who are really in a position where mercy is required … those are discretionary things that will be cut in the next budget cycle," Lautenberg predicted. "To see that as helpful to our country is something I don't understand."

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