Obama, congressional leaders agree to a debt deal
It looks as though congressional leaders have agreed to a deal that would raise the nation’s debt ceiling and cut spending in advance of tomorrow’s deadline:
President Obama and congressional leaders announced an agreement Sunday night to raise the debt limit by up to $2.4 trillion, ending a long partisan stalemate that threatened to send the nation into default.
The announcement caps a weekend of frantic negotiations as both parties worked to beat Tuesday’s deadline for a default.
The bipartisan deal is not final until rank-and-file members from both parties give it a green light but Republican leaders expressed confidence their side would approve it.
The deal would set up a select 12-member bicameral committee to put together another $1.5 trillion deficit-reduction package that must be reported to Congress by Thanksgiving and which Congress must approve by Christmas.
If the special committee deadlocks or Congress fails to act on its recommendations, it would trigger $1.2 trillion in across-the-board spending cuts divided evenly between defense and non-defense spending.
The automatic spending cuts would apply to Medicare but not Social Security, Medicaid, veterans or civil and military pay, according to a summary provided by Boehner’s office.
A congressional aide familiar with the deal said the Medicare cuts would not affect beneficiaries. Healthcare providers and insurance companies, however, would see a reduction in payments. Cuts to Medicare would be limited to 2 percent of the program’s cost, according to a Democratic fact sheet.
Total discretionary spending in fiscal year 2012 and 2013 would be reduced by $7 billion and $3 billion, respectively, compared to current levels, according to a Democratic summary. National security cuts would account for half of those savings.
Apparently, defense spending cuts were what was holding up an agreement. This deal will contain no tax hikes and requires a vote on the Balanced Budget Amendment between October 1st and the end of the year. Pending caucus approval from both sides, I would assume a vote would come later today.
Senate Majority Leader Harry Reid, who killed his own debt plan over the weekend due to progress in talks, signed off on an agreement last night. The Washington Post notes that conservatives in the Senate are likely to oppose whatever is put before the body; however, they will not block it. And Politico points out that many liberals in both chambers aren’t pleased with what they’ve heard about the compromise.