Obama, Congress close to debt deal
Congressional leaders, leaving no extra time before a default threatened for tomorrow, are racing to push through a compromise sealed with President Barack Obama last night to raise the U.S. debt limit by at least $2.1 trillion and slash government spending by $2.4 trillion or more, Bloomberg reported.
The House of Representatives plans votes today and the Senate may follow suit to consider the agreement reached during a weekend of negotiations that capped a months-long struggle between Obama and Republicans over raising the $14.3 trillion debt ceiling.
Leaders from both parties were working to sell the deal to their ranks, meeting resistance from social liberals who fault it for failing to increase taxes and from fiscal conservatives who say it’s insufficient to rein in the debt.
The deal would raise the debt ceiling in two installments, sufficient to serve the nation’s needs into 2013. The framework, as detailed by officials in both parties, would cut $917 billion in spending over a decade, raise the debt limit initially by $900 billion and assign a special congressional committee to find another $1.5 trillion in deficit savings by late November, with the latter measure to be enacted by Christmas.
If Congress met that deadline and target, or voted to send a balanced-budget constitutional amendment to the states, Obama would receive another $1.5 trillion borrowing boost. If Congress failed to take either step, or not produce savings of at least $1.2 trillion, the plan allows Obama to obtain a $1.2 trillion extension, but that would trigger automatic spending cuts across the government, including in defense and Medicare.
The negotiations have been good for Wall Street; the Dow Jones industrial average gained 1.11 percent, and the Standard & Poor’s 500 index climbed 1.15 percent at the open today.