UPDATED 08/01/11 10:59 a.m.

WASHINGTON (CBS) — The deal to raise the debt ceiling is expected to have an impact on the financial health of U.S. states, including Illinois.

It is also drawing reaction from local leaders.

President Barack Obama announced Sunday night that an agreement had been reached with Republicans to raise the debt ceiling, preventing what would have been a first-ever default by the U.S. government on its financial obligations, CBS News reported.

The deal would increase the debt ceiling by more than $2 trillion in two stages which will last through the 2012 election, which was a key demand for Mr. Obama and Democratic leaders.

The agreement now awaits approval by Congress, which could happen as early as later Monday.

As CBS 2’s Dorothy Tucker reports, all the talk and all the debate over the debt ceiling limit caused U.S. stocks, like those traded at Chicago’s Board of Trade to tumble for several days. Those stocks are expected to begin to climb over news of the deal.

But the process wasn’t easy. Front and center in the Senate debate was Majority Whip Dick Durbin (D-Ill.), who sparred with Sen. John McCain (R-Ariz.)

“First, I want to thank my colleague from Arizona. For those who are witnessing this, this is almost a debate in the United States Senate and it rarely happens,” Durbin said, “and I thank you for coming to the floor.”

Durbin continued: “Does the senator believe that defaulting on our debt for the first time in our history, which has been the threat looming over us for the House Republicans and others for a long period, is good for our economy?”

Replied McCain: “The message you send to the world – not just our markets, but to the world – that the United States of America is going to default on its debts is a totally unacceptable, scenario and beneath a great nation. We are in agreement, number one.”

Although lawmakers have not said what will be cut and by how much, state leaders are bracing for painful cuts in programs such Medicaid. There is also talk of possible cuts in education.

While the details remain unclear, the attitude of some Chicagoans is that, at least, we have a compromise.

“It’s about time they did their work instead of acting like a bunch of silly little schoolboys saying, ‘Well, it’s not my fault, it’s not my fault,’” said Natalie Hilberg.

She is among the millions of Americans who would have been hurt if the debt ceiling hadn’t been increased, and the government couldn’t pay its bills. Her partner gets a monthly social security check.

“It’s the difference between paying the mortgage and not paying the mortgage,” she said.

In addition to those who depend on Social Security, others who receive disability, welfare, or veteran pay will not have disruption of their checks, because Congress finally reached an agreement.

Meanwhile, traders on the floor in Chicago expect the stock market to rise with news of the compromise.

“That uncertainty of maybe not having Medicare and welfare checks and things like that going out, obviously, would be bad for the economy, would be bad for people in general in this country, so the markets reflect what’s going on,” said trader Larry Levin.

While most are pleased, there are those who are still angry that lawmakers took so long.

“I think the guys in office don’t act in good faith, or in good business terms. This should have been taken care of a long time ago,” said taxpayer Joe Connery. “It’s pathetic that it got this far along.”

Earlier Monday morning, commuters weighed in at a downtown Metra station. They told WBBM Newsradio 780 they were relieved there was finally a deal, but disgusted at how it was reached.

LISTEN: Newsradio 780’s Regine Schlesinger reports

“I’m glad that they’re not going to default on any of our debt,” one man said. “On the other hand, I would like to see much more spending cuts.”

“People in Congress should be able to reach a decision without going through all this. Why should the people be on edge all this time?” a woman said. “I think if we had a more decisive leader, I think that things could have been resolved much faster and much easier. I think their egos are getting in the way.”

One man says he plans to vote against every incumbent in the election next year.

Lawmakers are also weighing in.

U.S. Rep. Judy Biggert (R-Ill.) issued the statement, saying, “We’ haven’t yet been able to review all the final details, but I’ve spoken with the speaker and I’m optimistic that the deal announced tonight can win +my support and that of a majority of my colleagues.”

U.S. Sen. Mark Kirk (R-Ill.) also expressed support of the plan.

“The best way to achieve economic stability, reassure our allies and strengthen financial markets is by tackling our unsustainable spending trend,” he said in a statement. “This deal is a balance of immediate cuts and a promise of long-term reforms, coupled with a strong backstop. I am optimistic this bipartisan plan will pass with strong support from both parties and we can prevent an American default.”

Kirk added on the CBS 2 Morning News Monday that the legislation will make $1 trillion in cuts from the regular budget, and sets up an even more difficult process of cutting entitlement spending.

“The reason why I’m supporting this bill is should that entitlement spending reform bill collapse, further cuts happen anyway, which is why I think the markets are restoring so well, and it’s restoring confidence in the United States that we can keep our spending habit,” he said.

U.S. Rep. Joe Walsh (R-Ill.) said Republicans should be credited with the fact that fiscal responsibility is being discussed at all.

LISTEN: Newsradio 780’s Dave Marsett reports

“I am quite pleased and thankful that the Republicans are in charge of Congress, because if we weren’t, Dave, we wouldn’t be at this point right now,” he said. “We’ve changed the conversation.”

Walsh told Marsett he probably will not be voting for the bill. Still, in a telephone interview on the CBS 2 Morning News Monday, Walsh said he expects the bill will ultimately pass through the House.

“I think it’ll pass through the Senate. I think it’s a tough carry in the House,” Walsh said. “There’s an anxiety – everybody wants to get something done. I think at the end of the day, that sentiment will probably carry the day, but it will be a tough slide to get this through the House.”

Gov. Pat Quinn and Mayor Rahm Emanuel also expressed relief about the debt deal, as they both try go get their own financial houses in order.

LISTEN: Newsradio 780’s Regine Schlesinger reports

Mayor Emanuel says he’s looking to get city spending under control.

“From day one, I cut $75 million from the past budget. I took away credit cards from all the administrations; dipped 500 down to 30. I’ve dealt with the gap in the budget between the furlough policies as ended on June 30, and the other gap – $30 million there,” he said. “So we’ve made a series of cuts to get our financial house in order.”

Gov. Quinn, meanwhile, says cutting state spending is less important than stimulating the state’s economy.

“We were able, this year, to reduce spending, and still at the same time invest in education, which is the most important way to have jobs – economic growth – and economic growth is really the best way to balance the budget,” he said.

Quinn says a thriving economy will lead to a better state budget.

If the debt ceiling agreement is passed it will mean the lowest level of domestic spending since the 1950s.