Obama signs US debt ceiling bill, averts economic crisis

US President Barack Obama on Tuesday signed into law a bill that raises the nation's borrowing limit and avoids a possible debt default after it was passed by the Senate to avert a major economic crisis at the last moment.

This gave the US Treasury Department an immediate authority to borrow $400 billion. The government had hit its debt limit of $14.3 trillion on May 16 and has since been operating through spending and accounting adjustments.

"The President has signed the bill and turned it into law," White House Press Secretary Jay Carney told reporters, when his aide slipped him a note in this regard, in the middle of his daily news conference.

PERSEPCTIVE: US debt impasse is over, for now

The signing of bill came within hours of the Senate passing the austerity plan that seeks to reduce the deficit by $2.4 trillion.

The Senate voted 74 to 26 in favour of the bill after it was passed by the US House of Representatives following weeks of political wrangling between the Democrats and the Republicans.

Obama, just before signing the bill, in a speech said, "It was a long and contentious debate, and I want to thank the American people for keeping up the pressure on their elected officials to put politics aside and work together for the good of the country."

"This compromise guarantees more than $2 trillion in deficit reduction. It's an important first step to ensuring that, as a nation, it should live within its means." he said.

He added: "Yet it also allows us to keep making key investments in things like education and research that lead to new jobs, and assures that we're not cutting too abruptly while the economy's still fragile."