US deficit debacle has begun

Since mid-May, the United States has lived on borrowed time as Washington has debated multiple deficit-plans before the Aug 2 deadline.

After last-minute twists and turns, a deal seemed to come together on Sunday evening, when lawmakers closed a $3-trillion deal, in order to raise the US borrowing limit by $1 trillion and to assure financial markets that Washington will avoid a default.

Despite all the hype and drama, the proposed plan is a fragile and minimal two-stage deal that will not satisfy most Republicans or Democrats. If successful, it will avoid a US default. But it is unlikely to avert the downgrading of US credit rating, which, in turn, would have an adverse impact on US recovery.