Many of the world’s business headlines feature the US debt ‘problem’. By late last night, all should have been done and dusted as Senate puts a bill to raise the debt ceiling through.

After weeks of negotiations between the Democrats and the Republicans, President Barack Obama did enough to convince the Republicans to back the watered-down bill. The first vote was taken on Monday (night time for us) in the House of Representatives and a second, final, Senate vote was due late last night.

But if we look beneath the surface, we have to ask: What has the US agreed to, or agreed to do? In short, it’s more of the same. The US, if you like, the motor of the world’s economy, has simply agreed to raise the ceiling on the amount of money it can borrow. In other words, it has merely agreed to get itself into more debt.

And this is where the wrangling came in. President Obama knows that with just 1.3% growth in GDP, borrowing more money will mire the US in more problems. The growth rate is sluggish and expenses continue to creep up, especially with the very expensive deployment in Iraq and Afghanistan, as well as the Libya operation.

The bill, which has dented Barack Obama’s ratings, has been described as a compromise by both the president and leading Republicans. Both sides say that they are satisfied with the compromise reached, but both say they are not happy.

The tea party and Republicans more largely successfully blocked Obama’s attempts to raise taxes as part of the plan to slash the deficit, but the president was successful in blocking opposition attempts at a short-term debt ceiling extension – avoiding the same thing happening again come election time.

The broadest outlines of the emerging plan, would raise the federal debt limit in two stages by at least $2.2 trillion, enough to tide the Treasury over until after the 2012 elections. But at the same time, $2 trillion of budget cuts will now be phased in over the next decade.

No benefit cuts were envisioned for the Social Security pension system or Medicare, the federal programmes that provide healthcare payments to the elderly. But other programmes would be scoured for savings.

The first step should take place immediately, raising the debt limit by nearly $1 trillion and cutting spending by a slightly larger amount over a decade.

That would be followed by the creation of a new congressional committee that would have until the end of November to recommend $1.8 trillion or more in deficit cuts, targeting benefit programmes, such as Medicare and Social Security, or overhauling the tax code. Those deficit cuts would allow a second increase in the debt limit, which would be needed by early next year.

If the committee failed to reach its $1.8 trillion target, automatic spending cuts totalling $1.2 trillion would kick in, and the debt limit would rise by an identical amount. So in short, the US is going to borrow more and spend less, not exactly music to the ears for a sluggish economy. The US hopes to retain its unblemished credit rating, but perhaps the worries expressed in the preceding sentence are the same worries that the markets have. While we must wait till today to see the effect on trading, the initial rally yesterday subsided as more and more traders realised that although this is a step in the right direction, much more needs to be done. The US is in denial. The problems are there and they are deep-rooted, stemming from overspending and an exploding national debt. Echoes of Portugal perhaps?