ABC News is reporting that Congressional sources tell them Democrats and Republicans have now reached a tentative deal on raising the debt ceiling limit — which is no assurance that it will pass but increases the chances that there will be enough votes to avert what most experts predict would be a catatastrophic debt default that could decimate the American and world economies:
Here, according to Democratic and Republican sources, are the key elements:
*A debt ceiling increase of up to $2.1 to $2.4 trillion (depending on the size of the spending cuts agreed to in the final deal).
*They have now agreed to spending cuts of roughly $1.2 trillion over 10 years.
*The formation of a special Congressional committee to recommend further deficit reduction of up to $1.6 trillion (whatever it takes to add up to the total of the debt ceiling increase). This deficit reduction could take the form of spending cuts, tax increases or both.
*The special committee must make recommendations by late November (before Congress’ Thanksgiving recess).
*If Congress does not approve those cuts by December 23, automatic across-the-board cuts go into effect, including cuts to Defense and Medicare. This “trigger” is designed to force action on the deficit reduction committee’s recommendations by making the alternative painful to both Democrats and Republicans.
*A vote, in both the House and Senate, on a balanced budget amendment.Democrats won’t like the fact that Medicare could be exposed to automatic cuts, but the size of the Medicare cuts is limited and they are designed to be taken from Medicare providers, not beneficiaries.
Two sources briefed on the framework say the automatic cuts would hit Defense spending harder than Medicare. A Republican briefed on the framework says this will be unacceptable to many Republicans because it could force them to face a choice between accepting tax increases (if that is what the committee recommends) or automatic cuts that would gut the Pentagon’s budget.
Some thoughts:
If there is a deal what would it say about the U.S. political class? If it passes some will proclaim the system worked but this is closer to reality.
UPDATE: ABC now adds this:
As the mantra here goes, “nothing is agreed to until everything is agreed to.”
Congressional leaders have begun briefing their membership on this framework and are gauging reaction. The key question, of course, is whether there is enough support to pass it.
ABC’s Jonathan Karl adds this new detail:
As reported earlier, President Obama would get a debt ceiling increase of up to $2.4 trillion (the final amount tied to the amount of the cuts agreed to).
Here’s how that would work:
The current framework would give the president the authority to raise the debt ceiling in two parts: roughly half of it now and the balance at the end of the year.
Each increase would be subject to a Congressional resolution of disapproval.
If Congress voted to disapprove that increase, however, the President could veto their disapproval.
This is borrowed from a proposal made a while back by Mitch McConnell.
The bottom line is the same: the president would be able to raise the debt ceiling enough to get past the 2012 election.
Joe Gandelman is a former fulltime journalist who freelanced in India, Spain, Bangladesh and Cypress writing for publications such as the Christian Science Monitor and Newsweek. He also did radio reports from Madrid for NPR’s All Things Considered. He has worked on two U.S. newspapers and quit the news biz in 1990 to go into entertainment. He also has written for The Week and several online publications, did a column for Cagle Cartoons Syndicate and has appeared on CNN.