Jul 31, 2011- Debt Deal Reached

By: Michael Hyland
By: Michael Hyland

President Barack Obama announced Sunday evening a deal has been reached to raise the country's debt ceiling.

President Barack Obama addressed the nation Sunday evening to announce that congressional leaders have reached a deal in the ongoing debate over the debt ceiling. If passed in both chambers in the coming days, the deal will allow the country to avoid default on August 2.

The proposed deal calls for at least $2.4 trillion in defecit reduction over a decade and extends the debt limit through 2012.

Leaders of both parties in both chambers are expected to meet with rank-and-file members Monday. Votes in both chambers may come Monday as well.

It's still unclear in the House what coalition of members the leadership will have to assemble to pass the compromise bill.

According to NBC News, "The emerging deal would raise the government's $14.3 trillion borrowing limit in return for enacting measures that would reduce cumulative deficits over ten years by about 22 percent, or $2.8 trillion, based on the Congressional Budget Office's most plausible budget forecast."

The proposal calls for changes in two stages, effectively.

The first phase raises the debt ceiling by $900 billion and calls for $917 billion in defecit reductions over a decade.

The deal also calls for the formation of a 12-member congressional committee comprised of members of both chambers and both parties to make recommendations for $1.5 trillion in further budget reductions by November. Congress would have to take an up-or-down vote on those recommendations by the end of the year.

If Congress approves the recommendations, the debt ceiling would be increased as much as an additional $1.5 trillion. If no agreement is reached, $1.2 trillion will be automatically cut from the government's budget.

West Virginia, Kentucky and Ohio congressional members are already speaking about the deal.

Sen. Jay Rockefeller (D-WV) said in a statement:

“This never should have dragged on to the 11th hour and I am disappointed that so many in Congress used this debate for political purposes. That said, we have settled on a reasonable compromise that all sides should immediately support and which I intend to vote for. The plan will allow us to extend the debt ceiling – avoiding a major economic catastrophe that would have hurt families and individuals from all backgrounds by raising interest rates, making it harder to get a loan and forcing the federal government to ration how it pays its bills. The compromise proposal helps us secure our nation’s economy, reduces the deficit by making more than $900 billion in immediate spending cuts and setting up a plan for future cuts as early as this fall. Thankfully, those cuts will not come at the expense of Social Security, Medicaid and other safety net programs for low income Americans, which I have insisted since Day 1 should not be on the table right now.”

Senate Minority Leader Mitch McConnell (R-KY) said in remarks on the Senate floor Sunday:

“This is an important moment for our country. I appreciate the Majority Leader’s comments and want to say a few words to our colleagues who have been so patient over the past several days, and whose ideas and encouragement have been so helpful in getting us to this point.

“First of all, let me reiterate that before any agreement is reached, Republicans will meet to discuss the framework that the White House and the congressional leaders in both parties think would meet our stated efforts to cut spending more than the President's requested debt ceiling increase, prevent a national default, and protect the economy from tax increases. And to that end, I would like to say to my Republican colleagues that we'll be holding a conference meeting in the morning to discuss this framework and give everyone a chance to weigh in.

“But 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. And 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.”

From Rep. Shelley Moore Capito (R-WV):

“We have made great strides toward an agreement to increase the debt limit while fundamentally changing the way Washington works. This debate, often stressful and tiring, is an opportunity to prove to the American people that we can reverse the cycle of reckless spending that got us here in the first place.

“We never wavered from our goal of more spending cuts than the increase in the debt limit and no new taxes. I appreciate the leadership in both parties for coming together to reach an agreement that does not give up our principles and puts us on a path toward a brighter, more prosperous future.

“Thank you to the thousands of West Virginians who wrote, called and visited my offices to share their thoughts and concerns.”

From Sen. Joe Manchin (D-WV):

“While the American people had to witness a needlessly dysfunctional partisan political process, they have a reason to be optimistic. I will support this bipartisan compromise because it opens a commonsense pathway to work toward fixing our long-term spending and debt problems, while protecting vital programs like Social Security and Medicare. The deal responsibly cuts trillions in spending and provides a guaranteed vote in just a few months on what I hope will be a balanced long-term deficit reduction plan.

“In fact, as I urged last week, significant changes were made to this proposal, especially when compared to the Reid and Boehner bills that I voted against. By increasing responsible spending cuts, imposing caps on discretionary spending, eliminating so-called war savings gimmicks, protecting Social Security and Medicare and including a guaranteed vote on what I hope will be a responsible Balanced Budget Amendment, I hope that this legislation will chart a new fiscal course for this country – one in which our federal spending is based on our values and our priorities.

“That said, this deal is far from perfect; it is a compromise that does not have everything we would wish for in a perfect world. I still remain very concerned about a downgrade, and clearly, much work remains to be done to get our nation’s fiscal house in order. I am committed to doing everything in my power to bring fiscal discipline back to Washington in a responsible way that keeps our promises to our seniors and veterans.

“Looking ahead to this fall, I will work with my colleagues – both Democrats and Republicans – to develop a long-term deficit fix based on a balanced approach that includes responsible cuts, tax reform and the elimination of waste, fraud and abuse. I will strive for an approach that I hope will not only help prevent a credit rating downgrade, but will also help create a brighter future for the children of West Virginia and our nation.”

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