Debt Ceiling Deal Reached To Avert Default (LATEST UPDATES)
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.
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 fact sheet goes on to note that there is another enforcement mechanism that the president possesses.
- 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 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
Today 8:48 PM Obama Announces Deal
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."
WATCH:
A transcript of his remarks is below:
The first part of this agreement will cut about $1 trillion in spending over the next 10 years -- cuts that both parties had agreed to early on in this process. The result would be the lowest level of annual domestic spending since Dwight Eisenhower was President -- but at a level that still allows us to make job-creating investments in things like education and research. We also made sure that these cuts wouldn’t happen so abruptly that they’d be a drag on a fragile economy.
Now, I've said from the beginning that the ultimate solution to our deficit problem must be balanced. Despite what some Republicans have argued, I believe that we have to ask the wealthiest Americans and biggest corporations to pay their fair share by giving up tax breaks and special deductions. Despite what some in my own party have argued, I believe that we need to make some modest adjustments to programs like Medicare to ensure that they’re still around for future generations.
That's why the second part of this agreement is so important. It establishes a bipartisan committee of Congress to report back by November with a proposal to further reduce the deficit, which will then be put before the entire Congress for an up or down vote. In this stage, everything will be on the table. To hold us all accountable for making these reforms, tough cuts that both parties would find objectionable would automatically go into effect if we don’t act. And over the next few months, I’ll continue to make a detailed case to these lawmakers about why I believe a balanced approach is necessary to finish the job.
Now, is this the deal I would have preferred? No. I believe that 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 this compromise does make a serious down payment on the deficit reduction we need, and gives each party a strong incentive to get a balanced plan done before the end of the year.
Most importantly, it will allow us to avoid default and end the crisis that Washington imposed on the rest of America. It ensures also that we will not face this same kind of crisis again in six months, or eight months, or 12 months. And it will begin to lift the cloud of debt and the cloud of uncertainty that hangs over our economy.
Now, this process has been messy; it’s taken far too long. I've been concerned about the impact that it has had on business confidence and consumer confidence and the economy as a whole over the last month. Nevertheless, ultimately, the leaders of both parties have found their way toward compromise. And I want to thank them for that.
Most of all, I want to thank the American people. It’s been your voices -- your letters, your emails, your tweets, your phone calls -- that have compelled Washington to act in the final days. And the American people's voice is a very, very powerful thing.
We’re not done yet. I want to urge members of both parties to do the right thing and support this deal with your votes over the next few days. It will allow us to avoid default. It will allow us to pay our bills. It will allow us to start reducing our deficit in a responsible way. And it will allow us to turn to the very important business of doing everything we can to create jobs, boost wages, and grow this economy faster than it's currently growing.
That’s what the American people sent us here to do, and that’s what we should be devoting all of our time to accomplishing in the months ahead.
Thank you very much, everybody.
Today 8:40 PM Senate Republicans To Meet Monday As Well
Mitch McConnell announced that Republicans will hold a conference meeting in Monday morning as well to review the deal: "I can say there is a framework to review that will ensure significant cuts in Washington's spending."
Today 8:37 PM Reid: Democrats Meeting 11 A.M. Monday
Harry Reid, speaking on the Senate floor Sunday evening, announced that the Democratic caucus would meet at 11 a.m. Monday morning to discuss the deal negotiated with Republican leaders and the White House.
"My message to the world tonight is this nation and this Congress moving forward, and we're moving forward together."
"Democrats and Republicans have rarely needed to come together more than today. It won't make every Republican happy. It certainly won't make every Democrat happy either."
Today 7:31 PM McConnell Has 'Not Signed Off On Anything'
ABC News reports:
In a sign we’re not there yet, this evening Senate Minority Leader Mitch McConnell's spokesman told reporters flatly: "Sen. McConnell has not signed off on anything."
Today 7:18 PM 'A Sugar-Coated Satan Sandwich'
Roll Call reports:
Rep. Emanuel Cleaver, chairman of the Congressional Black Caucus, said early reports of the new deal appeared to be "a sugar-coated Satan sandwich." The Missouri Democrat said the CBC hadn’t yet made a formal declaration that the group would oppose it, "but this is a shady bill."Read more here.
Today 7:03 PM Boehner To Speak with GOP Caucus At 8:30 P.M.
@ JakeSherman :
the call has been scheduled: GOP conference call at 830 pm.
Today 6:33 PM Pelosi: Meeting With Democratic Leaders Was 'Constructive'
House Minority Leader Nancy Pelosi said a meeting with Democratic leaders Sunday afternoon was "constructive." But she did not say whether she and other House Democrats will support the current deal.
"We all might not be able to support it -- or none of us may be able to support it," Pelosi said.
Senate Majority Leader Harry Reid (D-Nev.) already stated his support for the deal, pending approval of his caucus.
"Of course, he has a lead on me because it was a Senate product," Pelosi said.
-- Elise Foley
Today 6:30 PM Pelosi To Meet With House Democratic Caucus Monday
@ Todd_Zwillich :
Pelosi: I have to meet w my caucus tomorrow to see how we will proceed. / Boehner likely to need many Dem votes
@ Todd_Zwillich :
Pelosi on #debt deal: "We all may not support it, or none of us may be able to support it."
Today 6:11 PM Senate Vote Tonight 'Highly Unlikely'
@ ReutersPolitics :
US Senate vote on debt deal "highly unlikely" before Monday according to senior congressional aide
Today 6:04 PM McConnell Meeting With Boehner
@ ryanjreilly :
Sen. McConnell just took back door into House Speaker Boehner's office. #debtceilingABC News' Jake Tapper reports on some of the behind-the-scenes talks taking place this weekend:
McConnell and Biden spoke four times on Saturday and four or five times today. McConnell and his team have been working closely through Biden and Biden’s chief of staff Bruce Reed.McConnell is negotiating on behalf of both himself and Boehner, both the Senate GOP and the House GOP.
Read more here.
Today 5:55 PM More Calls For Obama To Invoke 14th Amendment
Fox News reports that the Congressional Black Caucus and Progressive Caucus will call on President Obama Monday to invoke the 14th Amendment to raise the debt ceiling.
The CBC sent a letter to Obama Saturday arguing that he has "both the authority and a moral obligation" to invoke the Constitution's 14th Amendment "to avoid an economic catastrophe of historic proportions."
The White House, however, has repeatedly ruled out invoking the 14th Amendment as a solution to the debt ceiling crisis.
Today 5:49 PM Defense Cuts The 'Last Hurdle'
@ BreakingNews :
GOP source: "Last hurdle" to deal due to defense dept. cuts, administration wants larger cuts than GOP - NBC News
@ samsteinhp :
Leiberman puts out statement of concern on defense cuts in deal. doesn't say he will oppose the measure tho
@ jacksonjk :
House GOP aide confirms that House Republicans are still trying to bring down defense cuts in first year from 3 percent to 2 percent.
Today 5:24 PM Harry Reid Tentatively Signs Off On Debt Ceiling Deal
HuffPost's Sam Stein reports:
Senate Majority Leader Harry Reid (D-Nev.) has tentatively signed off on a deal to raise the nation's debt ceiling, which has been primarily negotiated between his Republican counterpart, Senate Minority Leader Mitch McConnell (R-Ky.), and President Barack Obama."Senator Reid has signed off on the debt-ceiling agreement pending caucus approval," Reid's spokesman, Adam Jentleson, said in a statement on Sunday afternoon.
In coming out in favor of the deal, Reid paves the way for its passage in the Senate. There are likely to be members of both parties who will end up opposing the measure, which would cut $1 trillion in spending over the course of ten years before giving way to a super committee of lawmakers to find $1.8 trillion in additional cuts. But that chamber seems like less of a steep hurdle for passage.
The real question mark is the House of Representatives. On Sunday, Democratic aides suggested that House Minority Leader Nancy Pelosi (D-Calif.) was inching towards formally supporting the deal. But no formal word has been issued from her office. Her caucus, which is compromised of more progressives than the Senate, presents a far tougher sell than Reid's.
Click here to read the full report.
Today 4:49 PM Reid: 'I Hope' Senate Will Vote Today
Emerging from a meeting of Democratic leaders in the House and Senate, Senate Majority Leader declined to comment on whether a deal had been reached.
He answered only one question to the mob of press, would the Senate would vote today on a deal.
"I hope so," Reid said.
-- Elise Foley
Today 4:40 PM Meeting Over
@ jacksonjk :
Senate Democratic leaders just left Pelosi's Capitol suite after 1.5 hour meeting.
Today 4:27 PM Dem Leaders Have Reportedly Signed Off On Deal
@ samsteinhp :
breaking: Dem leaders are all in pelosi's office, i'm told. and everyone has signed off on deal. waiting on Boehner.
@ samsteinhp :
Reid spokesman @AJentleson, clarifies in statement to huffpost: "Senator Reid has signed off pending caucus approval."
Today 4:03 PM Progressive Caucus Calls Emergency Meeting
A Democratic source on Capitol Hill tells The Huffington Post that the Congressional Progressive Caucus will hold an "emergency meeting" on Monday to discuss the final deal to raise the nation's debt ceiling.
The meeting will take place at 2:00 p.m. and there will be "a formal vote on the Caucus’ position to the deal." Members have been urged to attend.
Earlier on Sunday, Rep. Raul Grijalva (D-Ariz.), a co-chair of the caucus, put out a statement harshly opposing the deal as it has been described in press reports.
"This deal trades peoples’ livelihoods for the votes of a few unappeasable right-wing radicals, and I will not support it," the statement read. "Progressives have been organizing for months to oppose any scheme that cuts Medicare, Medicaid or Social Security, and it now seems clear that even these bedrock pillars of the American success story are on the chopping block. Even if this deal were not as bad as it is, this would be enough for me to fight against its passage."
How progressive lawmakers come down in the final vote may be the key to its passage. There are 76 members of the CPC, including one senator, Bernie Sanders (I-Vt.). Should House Speaker John Boehner (R-Ohio) bleed a good chunk of votes from his party -- a perfectly conceivable outcome -- he will be forced to rely heavily on Democratic votes.
Progressives have swallowed their complaints about major pieces of legislation before, including health care reform and the extension of the Bush tax cuts, but they do hold some leverage going into the debt ceiling vote, which will be held Monday or Tuesday.
-- Sam Stein
Today 3:26 PM Reid: 'We're Not Done Yet'
According to MSNBC, Harry Reid told reporters as he was walking to Nancy Pelosi's office that the details of the trigger in the deal have not yet been worked out:
"I really seriously say, everybody: We don't have that worked out. We don't have the content of what the trigger would be. We have a few things we're still working on, and they're simply not done yet."
Today 3:21 PM A Deal Before The Asian Markets Open?
@ daveweigel :
Reid, Durbin, Murray meeting in Pelosi's office now. Deal bf Asian markets open? Reid: "I sure hope so."The Asian markets begin to open at 5 p.m. ET.
Today 3:02 PM Deal Largely Done
ABC News' Jake Tapper reports:
Sources from both parties tell ABC News that the major potential roadblock in deficit negotiations-- the triggers -- are now essentially agreed upon. The plan is for the House to vote on this tomorrow, assuming all goes according to plan.The agreement looks like this: if the super-committee tasked with entitlement and tax reform fails to come up with $1.5 trillion in deficit reduction that passes Congress, the “neutron bomb” goes off, -- as one Democrat put it -- spending cuts that will hit the Pentagon budget most deeply, as well as Medicare providers (not beneficiaries) and other programs.
If the super-committee comes up with some deficit reduction but not $1.5 trillion, the triggers would make up the difference.
So it’s a minimum $2.7 trillion deficit reduction deal.
There are still some sticking points, however. Read more here.
Today 2:49 PM House, Senate Leaders Meeting At Capitol
@ ChadPergram :
House and Senate Democratic leaders meeting soon at the Capitol.
Today 2:41 PM Redstate Rejects The Deal
It's not just progressive groups who have quickly and loudly soured on the latest deal to resolve the debt-ceiling standoff. Redstate.com's Erick Erickson, who has fairly substantial sway over the more conservative parts of the Republican party, wrote a post for his site on Sunday in which he summarily rejects the reported deal.
What we know about the pending deal is that the Democrats and Republicans are agreeing to a Deficit Commission. Despite the media spin — and the spin of some Republican sycophants — the deficit commission, which will be a super committee of the Congress, will have the power to come up with new tax revenue.And if the Congress rejects the Commission’s demands for new tax revenue, there will be a trigger that cuts both medicare funding and defense funding.
Except, the defense funding cuts will be much more massive than the medicare cuts. And the GOP, in addition to seeing defense cut, would be hacking off seniors right before an election.
Click here to read the full post.
Today 2:26 PM Reid: Super Congress Cuts Committee Would Have 'No Constraints'
Senate Majority Leader Harry Reid (D-Nev.) focused attention on the last big stumbling block to a debt deal Sunday afternoon -- the full extent of power that would be granted to a new super Congress.
That body, a bipartisan commission with members from both chambers of Congress, would be tasked with coming up with an enforceable budget-cutting plan to slash another $1.8 trillion over 10 years on top of the $1 trillion Congress is getting ready to enact in phase one of a debt deal.
"The 12-member commission will be a key to that effort," Reid said on the Senate floor.
The debate behind closed doors appears to be boiling down to exactly what enforcement mechanism (a penalty) would be written into law to ensure the commission's plan to cut the nation's deficit would be taken seriously.
Democrats want that penalty to include automatic tax hikes -- likely on the wealthy and corporations -- as well as new, mandated cuts. Republicans want the penalty, or trigger, to include only dramatic cuts to entitlement programs, including Medicaid and Medicare, and other programs.
The problem with the GOP vision for Democrats is that Republicans want those cuts anyway and Republicans would have no incentive to try and stave them off if Congress fails to meet the target cuts.
That's why Democrats are insisting there be a revenue-raising element to the penalty to give the GOP an incentive to compromise.
Reid made clear in his opening remarks on the Senate floor Sunday exactly how powerful the super Congress would be -- yet how uncertain its final composition remains.
"It would be a joint committee that would move forward, and there would be a trigger that if they didn't resolve this, then something else would happen," Reid said, using the vaguest of descriptions to explain what the super Congress would do. "Based on past experiences, I think there would be tremendous incentive not to let that certain thing happen when the trigger kicked in."
Yet, Reid is committed to that plan and made clear how powerful he and Senate Majority Leader Mitch McConnell (R-Ky.) both feel it should be.
"Sen. McConnell and I agree that the commission owns the responsibility to set this country on the path to fiscal responsibility," Reid said, laying out the unprecedented authority of the body. "The joint committee -- there are no constraints. They can look at any program we have in government, any program. ... It has the ability to look at everything."
But in order for Democrats agree to the Super Congress, Reid said Republicans need to accept a chance they may not like some of the decrees it hands down.
"It will be essential to choose members with minds willing to consider every option, even when the options are tough pills to swallow for both parties," Reid said. "Cooperation is the only way forward. Compromise is the only way forward."
-- Michael McAuliff
Today 2:12 PM Durbin: Debt Deal Will Be The Death Of Keynesian Economics
HuffPost's Elise Foley reports:
The Republicans are killing Keynesian economics with their attempt to cut spending as the economy rebounds from a recession, Senate Majority Whip Dick Durbin (D-Ill.) said in a floor speech on Sunday."I would say ... that symbolically, that agreement is moving us to the point where we are having the final interment of John Maynard Keynes," he said, referring to the British economist. "He normally died in 1946 but it appears we are going to put him to his final rest with this agreement."
Keynes argued that aggregate demand was not always enough to spur full employment and that outside structures, such as governments, could influence the economy to create jobs and regulate business cycles. His thinking influenced later New Deal spending by President Franklin Delano Roosevelt.
Durbin said the economy is too weak for major cuts in spending, a view that is shared by many economists.
Click here to read more.
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