Washington (CNN) -- President Barack Obama on Tuesday signed a compromise plan raising the nation's $14.3 trillion debt ceiling, averting what could have been an unprecedented national default.
Obama's signature came hours after the U.S. Senate passed the plan on a 74-26 vote. The U.S. House passed the package a day earlier on a 269-161 vote, overcoming opposition from liberal Democrats and tea party conservatives.
The agreement reached by Obama and congressional leaders calls for up to $2.4 trillion in savings over the next decade, raises the debt ceiling through the end of 2012 and establishes a special congressional committee to recommend long-term fiscal reforms.
If the debt ceiling had not been increased before the end of Tuesday, Americans could have seen rapidly rising interest rates, a falling dollar and shakier financial markets, among other problems.
Here are some key dates in the months of grueling negotiations:
January
Treasury Secretary Timothy Geithner sends a letter to Congress on January urging lawmakers to act soon to increase the debt ceiling, warning that failure to do so would be disastrous for the economy. The Treasury estimates that U.S. borrowing needs could push the amount of debt past the legal borrowing limit of $14.294 trillion sometime between March 31 and May 16.
Also in early January, the Senate's "Gang of Six," a bipartisan group of three Republicans and three Democrats, begins discussions on a long-term deficit deal
February
17: House Speaker John Boehner says the House of Representatives won't pass a budget for the remainder of the year that doesn't cut spending and that he wouldn't support a series of short-term measures that keep funding at 2010 levels until a deal is reached.
March
Debt-ceiling talks continue privately as Congress and the White House focus their attention on domestic issues such as the economy and immigration -- and global issues involving the uprisings in North Africa and the Middle East.
Congressional Republicans continue to say -- both publicly and in private meetings with Obama -- they will not vote to raise the debt ceiling without conditions controlling federal spending. However, Republicans have not yet come to agreement among themselves about what those conditions should be. Some say there should be spending cuts, while others call for spending caps. Many say there must be a balanced-budget amendment to go along with any vote to raise the debt limit.
Passing a budget to fund the government through September becomes the hot-button issue. An impasse in the talks leads many to speculate that the government could shut down.
April
3: Republican Sen. John Cornyn says he will not vote to raise the debt ceiling unless it's accompanied by systematic reforms to address long-term spending and the national debt. The senator from Texas and member of the Senate Budget Committee also voices support for a balanced-budget amendment to the Constitution as a way to ensure the federal government lives within its means "instead of spending money we don't have."
4: Geithner once again sends a letter to Congress urging lawmakers to pass a plan to avoid defaulting on the country's loans. He says if the debt limit is not increased by May 16, the Treasury has authority to take certain extraordinary measures to postpone the date temporarily that the U.S. would otherwise default on its obligations.
8: Democrats and Republicans narrowly avert a partial shutdown of the federal government, agreeing on a budget deal and a short-term funding extension a little more than an hour before the clock strikes midnight and time runs out. The new funding extension, which cuts spending by $2 billion, will last through the next week.
13: Obama unveils his long-awaited deficit reduction plan, calling for a mix of spending reductions and tax hikes that the White House asserts would cut federal deficits by $4 trillion over the next 12 years without gutting popular programs such as Medicare and Medicaid. Obama's plan includes a repeal of the Bush-era tax cuts on families making more than $250,000 annually -- something sought by Democrats but strongly opposed by Republicans.
15: The budget deal reached to avert a government shutdown wins approval from both the House and Senate, sending it to Obama for his signature. The measure cuts $38.5 billion in spending while funding the government for the rest of the current fiscal year, which ends September 30. With its passage, the White House and Congress will now focus on what are expected to be more rancorous battles over a budget for fiscal year 2012 and the upcoming need to raise the federal debt limit.
The House passes the Republican leadership's 2012 budget proposal, approving a blueprint for cutting federal deficits by roughly $4.4 trillion over the next decade while radically overhauling Medicare and Medicaid -- two popular entitlement programs long considered politically untouchable. Every Democrat opposes the measure. The measure, which Obama opposes, has virtually no chance of clearing the Democratic-controlled Senate.
26: With a showdown over raising the debt limit looming, House Republican leaders say they will hold a series of "listening sessions" for rank-and-file GOP members when Congress returns from a break. The sessions are designed to get feedback on how to frame the controversial upcoming vote to raise the nation's debt limit, according to GOP sources on a conference call for House Republicans.
May
5: Vice President Joe Biden huddles behind closed doors with top congressional budget negotiators seeking to bridge a partisan divide over taxes and spending before the federal government slams into its debt ceiling in the summer.
9: Boehner indicates he plans to hold a hard line in debt-ceiling negotiations. Among his demands: spending cuts in exchange for support to raise the debt ceiling -- and the cuts will have to be greater in magnitude than the ceiling increase.
15: While the budget negotiations led by Biden continue with members of Congress, Senate Minority Leader Mitch McConnell, R-Kentucky, maintains his position that a vote to increase the debt limit must be accompanied by changes in spending.
16: The United States hits the $14.3 trillion debt limit. Geithner says he will move funds around to pay the bills. Crisis averted -- for now.
17: Gang of Six talks break down as Sen. Tom Coburn, R-Oklahoma, leaves the negotiations -- upset over provisions in its plan.
31: The House votes down a measure that will raise the debt ceiling; Democrats call it a political stunt since it has no chance of passing in the Senate.
June
23: An impasse in talks between Biden and congressional leaders develops over proposed tax increases that Democrats insist must be included in a debt bill to go along with the trillions in spending cuts, Republicans say.
29: The International Monetary Fund says the United States must lift the debt ceiling to prevent a "severe shock" to the world economy.
30: The Senate plans to forgo its scheduled recess for the week of July Fourth to work on legislation to raise the debt ceiling and cut the deficit, Senate Majority Leader Harry Reid says.
Reid announces the Senate will take the Independence Day holiday off but will return to work on July 5 after Obama criticizes lawmakers and urges them to cancel vacations.
The House is out of town, with lawmakers working in home districts.
July
3: Obama and Boehner meet to work out a "grand bargain" deal, which includes trillions in spending cuts, changing Medicare and Social Security and reforming the tax system.
5: The president calls on congressional leaders to meet at the White House to work out a deal. A day later, Obama indicates there is still huge differences between the parties.
8: The job market hits a major roadblock, as hiring slows to a crawl and the unemployment rate unexpectedly rises. The economy gains just 18,000 jobs in June, the government reports, sharply missing most expectations and coming in even weaker than the paltry 25,000 jobs added in May. Meanwhile, the number of unemployed rises to 14.1 million.
9: Boehner indicates that a "grand bargain" is unlikely due to the differences on Obama's plan to raise revenues along with the spending cuts.
10: Obama meets with congressional leaders at the White House. At one point, the talks get heated between House Majority Leader Eric Cantor and the president. Multiple sources, speaking on condition of anonymity, say Obama tells the gathering that "this could bring my presidency down," referring to his pledge to veto any short-term extension of the debt ceiling. Sources say he vows, "I will not yield on this."
Cantor tells reporters after the meeting that he proposed a short-term agreement to raise the federal debt ceiling, a position Obama has previously rejected.
12. In an interview with CBS News, Obama warns that he can't guarantee older Americans will receive their Social Security checks next month if a deal is not reached in time. Republicans accuse the president of resorting to scare tactics.
13: The public pressure on lawmakers to raise the debt ceiling is ratcheted when a major rating agency says it will put the sterling bond rating of the United States on review for possible downgrade. Moody's Investors Services says it initiated the review because of "the rising possibility" that Congress will fail to raise the debt ceiling by August 2.
14: The seriousness of the overall situation is reinforced when a major credit rating agency, Standard and Poor's, unveils it is placing the U.S. sovereign rating on "CreditWatch with negative implications."
Also, Reid confirms that he and McConnell are working on a possible debt ceiling measure that could come up in the event the broader negotiations fail to reach agreement. It is based in part on a plan McConnell unveiled that would set up three short-term increases in the debt ceiling while at the same time registering the disapproval of Congress for such a move. Both Obama and Boehner say McConnell's plan is not the preferred option but indicate a variation of it could ultimately be accepted to avoid a larger crisis.
15: Obama says he has not given up hope for a broad deficit reduction deal, urging Republicans to accept a fiscal stability package that includes higher taxes on the wealthy and reforms to politically popular entitlement programs such as Medicare and Social Security.
Republicans also say they intend to move forward with a vote on the "cut, cap and balance" plan -- a blueprint to cut spending significantly, cap future expenditures and amend the Constitution to require a balanced budget in the future.
19: A Gang of Six plan gains traction and becomes the talk of Washington. But the top two Democrats in the Senate indicate they don't think there is enough time to pass the comprehensive debt reduction plan.
Meanwhile, the House votes 234-190 to pass the "cut, cap and balance" plan -- the solution favored by hard-line conservatives. The vote is almost completely on party lines for the measure that includes the requirement that Congress pass a balanced-budget amendment before agreeing to extend the federal debt ceiling.
24: Reid says he is preparing a proposal to raise the ceiling through the end of 2012 and cut $2.7 trillion in debt. The measure does not call for any tax revenue increases.
Geithner, who first alerted Congress in January that the $14.3 trillion debt ceiling would need to be raised, says the situation is urgent.
25: In a prime-time address, Obama singles out House Republicans for intransigence and says the political showdown is "no way to run the greatest country on Earth."
In response, Boehner says that excessive government spending caused the problems the nation faces and cutting that spending is the only way to solve the problem.
Earlier, Reid and Boehner had unveiled their proposals. Reid's calls for roughly $2.7 trillion in spending cuts over the next decade while raising the debt limit by $2.4 trillion -- an amount sufficient to fund the government through 2012
Boehner's plan requires two votes. The first would cut $1.2 trillion in spending cuts over the next decade while raising the debt ceiling through the end of 2011. The second would raise the debt limit through 2012 if Congress approves a series of tax reforms and entitlement changes outlined by a bipartisan committee of Senate and House members.
26: Boehner's plan runs into trouble when the Congressional Budget Office says it fails to reduce spending and deficits as much as advertised. Conservatives criticize the Boehner plan for not doing enough to tackle the nation's mounting deficits and debt.
Meanwhile, Capitol Hill phone lines are jammed and websites of key lawmakers -- including Boehner -- crash as citizens try to weigh in on the debate after Obama's call the night before for the public to push their elected representatives to reach a deal.
27: Signs of disarray emerge in a House Republican caucus split between unhappy conservatives and a leadership struggling to maintain party unity. "Get your ass in line," Boehner tells his fellow Republicans in the face of divisive infighting over his proposal.
Several members are furious when they learn that staff members for the Republican Study Committee -- a group of fiscally conservative legislators -- sent e-mails to outside groups encouraging them to put pressure on fellow Republicans to oppose Boehner's plan.
Meanwhile, Reid's plan comes up short of its promised savings -- a CBO analysis concludes it would reduce deficits over the next decade by $2.2 trillion -- $500 billion short of promised savings of $2.7 trillion.
28: House Republicans call off a vote on Boehner's plan when he is unable to muster sufficient support from his own caucus to guarantee it would pass in the face of expected unified Democratic opposition.
Fiscal conservatives, many of them elected last year with tea party backing, say the plan doesn't cut enough and fails to mandate that the federal government maintain a balanced budget.
29: Boehner's plan narrowly passes his chamber after he is able to muster support from wary conservatives by including a provision requiring congressional passage of a balanced budget amendment to the Constitution before the debt ceiling can be extended through the end of 2012.
No Democrats vote for the plan and 22 Republicans vote against it as well.
The Senate promptly tables the proposal when it comes to them hours later.
Reid announces in the morning that he intends to "take action" on a Senate bill by the end of the day but later complains on the Senate floor that Republicans would effectively filibuster his proposal by requiring a 60-vote supermajority in the 100-member chamber to start debate on it.
30: The Republican-controlled House rejects Reid's plan, partisan payback for the Democratic-controlled Senate's rejection of Boehner's plan the day before.
Two sources familiar with negotiations between the White House and congressional leaders say the framework of a deal is being put together. The framework calls for up to $2.8 trillion in total deficit reduction over the next decade.
The framework includes upfront spending cuts in the range of roughly $1 trillion, the sources say. A special congressional committee would recommend additional spending reductions of up to $1.8 trillion no later than Thanksgiving. If Congress failed to approve the recommended cuts by late December, automatic, across-the-board cuts -- including both defense and Medicare -- would take effect.
31: Obama announces a deal between his administration and congressional leaders has been reached. The agreement, which still requires congressional approval, proposes a two-stage process. In the first stage, it includes $917 billion in spending cuts and other deficit reduction now, as well as a $900 billion increase in the debt ceiling.
In the second stage, a special joint committee of Congress will recommend further deficit reduction steps totaling $1.5 trillion or more by the end of November, with Congress obligated to vote on the proposals by the end of the year.
If the recommendations are enacted, Obama would be authorized to increase the debt ceiling by up to $1.5 trillion -- as long as the additional deficit reduction steps exceed that amount. The president also can get the additional debt ceiling increase if both chambers of Congress pass a balanced budget amendment to the U.S. Constitution in votes to be held by the end of the year.
However, Obama would be able to request only up to $1.2 trillion in additional debt ceiling if the special congressional committee fails to agree to at least $1.2 trillion in cuts. At that point, across-the-board spending cuts -- split between defense spending and nondefense programs -- would be activated, equal to the difference between the committee's recommendations and the $1.2 trillion in additional debt ceiling.
August
1: The U.S. House passes the debt ceiling deal that the White House and congressional leaders reached the previous day.
2: The Senate approves the measure and Obama signs it.
CNN's Ted Barrett, Dana Bash, Kate Bolduan, Annalyn Censky, Tom Cohen, Candy Crowley, Lisa Desjardins, Ed Hornick, Jeanne Sahadi, Alan Silverleib, Paul Steinhauser, Xuan Thai, Jessica Yellin and Deirdre Walsh contributed to this report.
