Obama signs debt limit-paygo bill into law

WASHINGTON (Reuters) - President Barack Obama signed a law on Friday lifting the U.S. government’s borrowing authority to $14.3 trillion and installing a pay-as-you-go rule to curb spending, the White House said.

The U.S. House of Representatives passed the debt limit bill last week, giving it final congressional approval and sending it to the White House for Obama’s signature.

The U.S. Treasury was expected within weeks to exceed the current $12.4 trillion government debt limit set in December. Failure to raise the limit would roil financial markets.

The bill also contained ‘pay-as-you-go’ legislation that requires new spending to be offset with cuts elsewhere.

Democrats, who control the U.S. Congress, crafted the “paygo” language to deflect voter anger over soaring spending and to show they are serious about fiscal responsibility. They say paygo rules helped the country turn budget deficits into surpluses in the 1990s.

Obama has proposed a record $1.56 trillion deficit for fiscal 2010 as he tries to boost growth and jobs, equivalent to 10.6 percent of gross domestic product, but projects this funding gap to have halved as a share of the economy by 2013.

Reporting by Matt Spetalnick and Alister Bull