The question now is whether the U.S. will be able to hold onto its Triple-A credit rating.
During debate in the Senate, Tennessee Republican Lamar Alexander said Congress is finally moving toward fiscal sanity.
Utah Republican Orrin Hatch voted no, saying the bill will not lead to enough spending cuts.
With just hours to go before the August 2 deadline, President Obama's signature put an end to the lengthy negotiations over the nation's debt ceiling.
But final passage of the agreement didn't impress Wall Street as the Dow Jones Industrial Average dropped for an eighth straight day on Tuesday.
"We haven't done much to the debt but we're undermining our ability to grow out of the debt. That's why the ratings agencies are keeping us on watch, on negative outlook. everybody knows at the end of the day we actually haven't improved things but we've made them worse."
The new debt deal includes a special congressional committee consisting of 12 lawmakers.
They will have until late November to come up with a plan to recommend long-term fiscal reforms to cut one-point-five trillion dollars.
"Unlike commissions of the past which include people people who are not members of Congress, this is all members of Congress. It's actually a smart way to go about this. There surely is a big sword hanging over their head."
"I'm going to put people on there who have a constructive view about getting a result. We need to fix our entitlements, we need to deal with the challenge of tax reform. we need to get an outcome for the country."
If the committee fails to agree, an automatic round of cuts will kick in.
Credit rating agency Moody's said Tuesday the U.S. will keep its sterling Triple Ac credit rating for the time being, but lowered its outlook on U.S. debt to "negative."
A "negative outlook" indicates the possibility that Mmoody's would downgrade the country's sovereign credit rating within a year or two.