Sunday, July 31, 2011

Debt Ceiling Deal Reached To Avert Default

Debt Ceiling Deal

AP/The Huffington Post First Posted: 7/31/11 08:38 PM ET Updated: 7/31/11 09:21 PM ET

WASHINGTON — President Barack Obama and Republican congressional leaders reached historic agreement Sunday night on a compromise to permit vital U.S. borrowing by the Treasury in exchange for more than $2 trillion in long-term spending cuts.

Officials said Republican Speaker John Boehner telephoned Obama at mid-evening to say the agreement had been struck.

Democratic Majority Leader Harry Reid said that both his party and opposition Republicans gave more ground than they wanted to. He said it'll take members of both political parties to pass the measure.

Minority Leader Mitch McConnell said that the pact "will ensure significant cuts in Washington spending" and he assured the markets that a first-ever default on U.S. obligations won't occur.

Both the leaders said they will brief their colleagues tomorrow on the details of the agreement.

Check back here for the latest developments.

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Today 11:19 PM GOP Senator Threatens To Filibuster Deal

Sen. Mike Lee (R-Utah) told CNN on Sunday night that he intends to filibuster the agreement reached between the White House and top congressional lawmakers to raise the debt ceiling.

Today 10:52 PM Dem Source: The Deal Came Down To Defense Cuts

The deal to raise the debt cap nearly came apart over defense spending cuts, but Republicans relented at the last minute.

Here's how a Senate leadership aide laid it out:

One of the final sticking points this evening was the issue of how to ensure the domestic discretionary spending cuts in FY12 and FY13 would be spread out across both defense and non-defense programs.

House Republicans started out insisting on a “freeze” of defense spending so that the entirety of the reductions would fall on the non-defense side. This would have imposed a disproportionate share of the burden on important domestic programs such as education and medical research. Democrats insisted on imposing a “firewall” that would ensure that any attempts to increase defense spending could not be done at the expense of domestic discretionary programs.

House Republicans balked at the firewall idea when it was first proposed by Senate Democratic leadership staff and the majority staff of the Senate Appropriations Committee almost two weeks ago. In response, Senate Democrats offered a compromise: if House Republicans would accept the firewall in concept, Senate Democrats would allow for other forms of security-related spending (State Department/Foreign Operations, Homeland Security, Military Construction/Veterans Affairs) to be grouped together on one side of the firewall along with Pentagon funding. As part of this condition, the total annual reduction in spending would be split evenly between the security side of the firewall and the non-security side of the firewall.

This proposal was at first accepted by Majority Leader Eric Cantor’s office, but then later rejected. In the end, in a decision that paved the way for a deal with the Obama administration and Senate Democrats, the Speaker’s office returned to the same firewall compromise that House Republicans had earlier rejected.

As a result, out of the $7 billion in domestic discretionary cuts taking effect in FY12, at least half will come from “security”-side funding. For FY13, roughly half of the $3 trillion in cuts will come from “security”-side funding.

Today 10:38 PM Debt Ceiling Deal That Cuts Trillions, Creates 'Super Congress' Announced By Party Leaders

HuffPost's Michael McAuliff, Sam Stein and Elise Foley report:

Congressional leaders and President Obama on Sunday night announced they've cut a deal to avert a historic U.S. default, saying they have assembled a framework that cuts some spending immediately and uses a "super Congress" to slash more in the future.

The deal calls for a first round of cuts that would total $917 billion over 10 years and allows the president to hike the debt cap -- now at $14.3 trillion -- by $900 billion, according to a presentation that House Speaker John Boehner (R-Ohio) made to his members. Democrats reported those first cuts at a figure closer to $1 trillion.

The federal government could begin to default on its obligations on Aug. 2 if the measure is not passed.

The next round of $1.5 trillion in cuts would be decided by a committee of 12 lawmakers evenly divided between the two parties and two chambers. This so-called super Congress would have to present its cuts by Thanksgiving, and the rest of Congress could not amend or filibuster the recommendations.

Click here to read more.

Today 10:16 PM Pelosi Does Not Promise Support

House Minority Leader Nancy Pelosi (D-Calif.) was the most negative of the Congressional leaders who weighed in on the deal, and notably did not promise to support it.

"We all agree that our nation cannot default on our obligations and that we must honor our nation's commitments to our seniors, and our men and women in the military," she said in a statement. "I look forward to reviewing the legislation with my Caucus to see what level of support we can provide."

-- Michael McAuliff

Today 9:43 PM White House Fact Sheet Lays Out Deal Specifics

A White House fact sheet distributed to reporters shortly after the president spoke laid down the specific elements of Sunday night's deal to raise the debt ceiling:

  • The president will be authorized to increase the debt limit by at least $2.1 trillion, eliminating the need for another increase until 2013.
  • The first tranche of cuts will come in at nearly $1 trillion. That includes savings of $350 billion from the Base Defense Budget, which will be trimmed based off a review of overall U.S. national security policy.
  • A bipartisan committee with enhanced procedural authority will be responsible for pinpointing $1.5 trillion in deficit reduction from both entitlements and tax reform, as well as other spending programs.
  • The committee will have to report out legislation by November 23, 2011.
  • Congress will be required to vote on Committee recommendations by December 23, 2011.
  • The trigger mechanism -- should the committee's recommendations not be acted upon -- will be mandatory spending cuts. Those cuts, which will begin in January 2013, will be split 50/50 between domestic and defense spending. Social Security and Medicare beneficiaries and "low-income programs" would be exempted from those cuts.

The fact sheet goes on to note that there is another enforcement mechanism that the president possesses.

"The Bush tax cuts expire as of 1/1/2013, the same date that the spending sequester [the trigger mechanism] would go into effect," the fact sheet reads. "These two events together will force balanced deficit reduction. Absent a balanced deal, it would enable the President to use his veto pen to ensure nearly $1 trillion in additional deficit reduction by not extending the high-income tax cuts."

-- Sam Stein

Today 9:39 PM Cleaver: 'If I Were A Republican, I Would Be Dancing In The Streets'

Rep. Emanuel Cleaver (D-Mo.), the leader of the Congressional Black Caucus, who earlier in the day called the emerging debt ceiling deal a "sugar-coated Satan sandwich," stood by his criticism in an interview with MSNBC following Obama's announcement of the deal.

"We lost this early on," Cleaver said. "I came back to Washington at the beginning of the year thinking we were going to create jobs, and we allowed the national discourse to change from jobs to the debt, and so right now there's very little we can do."

"If I were a Republican, I would be dancing in the streets," he said. "I don't have any idea what the Republicans wanted that they didn't get. And I can't tell you anything that Democrats got out of this deal, except that we're probably going to prevent the nation from crashing."

Today 9:26 PM Biden: 'Compromise Makes A Comback'
@ VP : I'm proud of the President. Persistence. Compromise makes a comeback.—VP
Today 9:14 PM Boehner To GOP Conference: 'This Isn’t The Greatest Deal In The World'

House Speaker John Boehner (R-Ohio) spoke with the GOP conference on Sunday evening, telling them, "there’s no agreement until we’ve talked to you."

He was tepidly positive on the deal, saying it is a victory for the small government principles of the party despite being less than ideal.

“Now listen, this isn’t the greatest deal in the world," he said, according to excerpts of the call provided to press by Boehner's office. "But it shows how much we’ve changed the terms of the debate in this town."

Boehner painted the deal as victory for the Republican party because it did not include revenues, which Democrats have long called for as part of a final deal.

"There is nothing in this framework that violates our principles," he said. "It’s all spending cuts. The White House bid to raise taxes has been shut down."

Boehner's office circulated a Powerpoint presentation called a "two-step process to hold President Obama accountable" on Sunday evening that laid out the deal in broad strokes. The presentation touts the absence of tax hikes in the final deal.

Because the "super Congress" will make decisions based on current law, it will be effectively "impossible for Joint Committee to increase taxes," according to the presentation.

View the full Powerpoint presentation here.

-- Elise Foley

Today 8:52 PM Leaders Announce Deal Is In Place

President Obama and leaders of the Senate say they've cut a deal to head off a historic American default.

"Leaders from both parties have come together for the sake of our economy to reach a historic, bipartisan compromise that ends this dangerous standoff," said Senate Majority Leader Harry Reid (D-Nev.) on the Senate floor Sunday night.

"At this point I think I can say with a high degree of confidence that there is now a framework to review that will ensure significant cuts in Washington spending," said Senate Minority Leader Mitch McConnell (R-Ky.).

"We can assure the American people tonight that the United States of America will not for the first time in our history default on its obligations," McConnell said.

The were followed quickly by President Obama, who declared that Congress should pass the compromise.

House Speaker John Boehner was making that case to his members even as the other leaders spoke.

House Minority Leader Nancy Pelosi was set to talk to her caucus in the morning.

The multiple statement suggested that the deal has enough support in the middle to succeed, but lawmakers on each side could balk at the plan.

"To pass this settlement, we’ll need the support of Democrats and Republicans in both the House and Senate. There is no way either party – in either chamber – can do this alone," said Reid.

"I know this agreement won’t make every Republican happy. It certainly won’t make every Democrat happy, either," Reid added. "Both parties gave more ground than they wanted to. And neither side got as much as it had hoped."

-- Mike McAuliff

President Obama announced Sunday night that Congress and the White House had reached agreement on a deal to raise the debt ceiling, which would cut about $1 trillion in spending over the next 10 years and create a bipartisan committee to propose further cuts by November.

"Is this the deal I would have preferred? No," the president said. "I believe we could have made the tough choices required on entitlement reform and tax reform right now, rather than through a special congressional committee process." But the agreement does ensure that the U.S. will not default on its debt obligations, the president announced.

"This has been messy, it's taken far too long," the president continued. "Nevertheless, the leaders of both parties have found their way toward compromise, and I want to thank them for that."

"We're not done yet," Obama said. "I want to urge members of both parties to do the right thing and support this deal."

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