An immediate financial catastrophe was averted when Congress raised the limit on U.S. borrowing, a deal that will keep the government solvent until early 2013. That meets a demand of President Barack Obama, who didn't want the messy business back on the agenda during his campaign for re-election.
He remains afflicted, however, by pieces of the legislation that promise even more bruising fights over the role of government, battles that resume this autumn and will again lay bare and magnify the bitter stalemate in modern American politics.
With government divided — Republicans back in control of the House of Representatives — Obama's policy initiatives will remain hamstrung by the outsized power of the conservative tea party wing of the opposition party.
Here's why:
After weeks of politically bloody combat, Congress finally passed legislation just before the Tuesday midnight deadline that raises America's self-imposed limit on borrowing. It stood a $14.3 trillion. The deal allows sufficient new borrowing — a total, in stages, of between $2.1 trillion to $2.5 trillion — through early 2013, beyond the November 2012 presidential and congressional elections.
In return for those increases, a routine action in the past that was unencumbered by action on the budget, lawmakers agreed to $914 billion in spending cuts in a first stage. Then a special bipartisan congressional committee, six Republicans and six Democrats — three members of each party from both houses — will be charged with finding between $1.2 trillion and $1.5 trillion in additional spending cuts by in late November.
The idea is to keep additional new borrowing roughly in balance with reductions in spending, cuts that would then compound to lower the government deficit over a decade.
Politically sensitive benefit programs such as the Social Security pension system and Medicare, government paid medical insurance for the elderly, will be on the table. So, too, an overhaul of the tax code. Congress would have until Christmas to vote on the committee recommendations without the ability to make changes.
If the special committee can't agree by the end of November, that would trigger $1.2 trillion in automatic spending cuts, affecting the Pentagon as well as additional domestic programs.
Compounding the monumental task of finding common ground among what will likely be teams politicians from opposite ends of the spectrum will be looming elections.
Tea party Republicans, elected on promises to shrink government and blocking any increase in taxes, will be facing off against Democrats who insist that tax revenues must be increased by annulling existing loopholes that benefit Big Business, Big Oil and the wealthiest Americans.
Republicans, especially the tea partyers, most likely will find it politically impossible to act on tax increases. Democrats will stand firm against cutting the cherished social safety net programs.
In the hours after Obama signed the rescue bill Tuesday, the lines already were being starkly drawn.
"We can't balance the budget on the backs of people who have borne the biggest brunt of this recession," the president said, renewing his call for higher taxes on the wealthy. "Everyone is going to have to chip in. It's only fair."
Senate Minority Leader Mitch McConnel, a powerful Republican conservative, declared: "The American people agreed with us on the nature of the problem. They know the government didn't accumulate $14.3 trillion in debt because it didn't tax enough." He then told Fox News, "I'm comfortable we aren't going to raise taxes coming out of this joint committee."
The next battle, meanwhile, is shaping up under a cloud of extremely worrisome economic news both in the United States and abroad. U.S. and global stock markets have fallen dramatically over the last several days and were unrelieved by the Tuesday debt and default deal in Washington.
Weakening U.S. consumer spending, disappointing factory orders and continued high unemployment have nearly stalled growth. Some economists and financial experts say the country may be falling back into recession.
Debt turmoil continues to haunt the Greek economy and has spread to Italy, the third largest economy in the European Union, and Spain. Given the increasing interlinkage of global economies, bad news and weakness anywhere causes troubling waves everywhere.
In the United States, with political opposites ready to resume the trench warfare and a return to stalemate looking assured, the forecast for the coming months would appear to include still more of the nastiness that has gripped Washington for months. Compounding economic difficulties will only solidify the logjam.
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Hurst is AP international political writer.