Washington — Two days before the deadline for a possible US government default, President Barack Obama and congressional leaders reached agreement today on a legislative package that would extend the federal debt ceiling while cutting spending and guaranteeing further deficit-reduction steps.
The proposed deal, which still requires congressional approval, brought some immediate relief to global markets closely watching the situation play out and to a nation filled with anger and frustration over partisan political wrangling that threatened further economic harm to an already struggling recovery.
However, there wass no guarantee the plan would win enough support to pass both chambers of Congress.
“There are still some very important votes to be taken by members of Congress, but I want to announce that the leaders of both parties in both chambers have reached an agreement that will reduce the deficit and avoid default,” Obama said in brief remarks to reporters.
Democratic and Republican leaders in both the House and Senate were briefing their caucuses about the agreement on Sunday night and Monday. A Senate Democratic leadership aide told CNN that the Senate planned to vote first on the measure on Monday afternoon, and if the measure passes an expected Republican filibuster attempt, the House could vote on it Monday night.
According to information from the White House and a PowerPoint presentation for his colleagues by House Speaker John Boehner, the proposed deal included $2.4 trillion in deficit reduction over 10 years and authorized an increase in the federal debt ceiling by a slightly smaller amount to allow the government to pay its debts through 2012.
The agreement proposed 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.
Because of the pending Tuesday deadline, Obama would have immediate authority to raise the debt ceiling by $400 billion, which would last through September, according to the White House document. For the other $500 billion of debt ceiling extension in the first stage, Congress can vote on resolutions of disapproval that, if passed, the president can then veto, the White House said.
In the second stage, a special joint committee of Congress would recommend further deficit reduction steps totaling $1.5 trillion or more by the end of November, with Congress obligated to vote on the panel’s 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 exceeded that amount. The president also could get the additional debt ceiling increased if both chambers of Congress passed a balanced budget amendment to the US Constitution in votes to be held by the end of the year. (CNN)
