It’s not over yet. Crisis has not been averted. However, in Washington style, the can has been kicked down the broadway because there is no balanced budget in sight. Projected potential savings, multi-billions per fiscal year instead of half a trillion, without revenue increases can not add up to a balanced budget. After the next election cycle, when more fiscal conservatives are elected, this farce will be repeated again.
Jul 31, 10:32 PM EDT
It’s a deal: Obama, Congress will avert default
By DAVID ESPO
AP Special Correspondent
WASHINGTON (AP) — Ending a perilous stalemate, President Barack Obama and congressional leaders announced historic agreement Sunday night on emergency legislation to avert the nation’s first-ever financial default.
The dramatic resolution lifted a cloud that had threatened the still-fragile economic recovery at home – and it instantly powered a rise in financial markets overseas.
The agreement would slice at least $2.4 trillion from federal spending over a decade, a steep price for many Democrats, too little for many Republicans. The Treasury’s authority to borrow would be extended beyond the 2012 elections, a key objective for Obama, though the president had to give up his insistence on raising taxes on wealthy Americans to reduce deficits.
The deal, with scant time remainingefore Tuesday’s debt-limit deadline for paying government bills, “will allow us to avoid default and end the crisis that Washington imposed on the rest of America,” the president said in an announcement at the White House.
Default “would have had a devastating effect on our economy,” he said.
House Speaker John Boehner telephoned Obama at mid-evening to say the agreement had been struck, then immediately began pitching the deal to his fractious rank and file.
“It isn’t the greatest deal in the world, but it shows how much we’ve changed the terms of the debate in this town,” he said on a conference call, according to GOP officials. He added the agreement was “all spending cuts. The White House bid to raise taxes has been shut down.”
The House Democratic leader, Rep. Nancy Pelosi, was non-committal. “I look forward to reviewing the legislation with my caucus to see what level of support we can provide,” she said in a written statement.
No votes were scheduled in either house of Congress before Monday, to give rank and file lawmakers time to review the package. Senate approval seems virtually certain; the House could prove more difficult.
Without legislation in place by Tuesday, the Treasury would not be able to pay all its bills, raising the threat of a default that administration officials say could inflict catastrophic damage on the economy.
If approved, though, a compromise would presumably preserve America’s sterling credit rating, reassure investors in financial markets across the globe and possibly reverse the losses that spread across Wall Street in recent days as the threat of a default grew.
Even word of an impending deal earlier in the day by Senate Republican Leader Mitch McConnell of Kentucky sent U.S. stock futures upward. And before Obama had finished speaking, Japan’s benchmark Nikkei index, opening Monday morning – at 8 p.m. Sunday on America’s East Coast – was up 1.7 percent in early trading.
Pending final passage, the agreement marked a dramatic reach across party lines that played out over six months and several rounds of negotiating, interspersed by periods of intense partisanship.
“Sometimes it seems our two sides disagree on almost everything,” Senate Majority Leader Harry Reid said in floor remarks.
“But in the end, reasonable people were able to agree on this: The United States could not take the chance of defaulting on our debt, risking a United States financial collapse and a world-wide depression.”
Vice President Joe Biden, who played an important part in this weekend’s negotiations, agreed. He tweeted: “Compromise makes a comeback.”
Not everyone felt that way.
“Someone has to say no. I will,” said Rep. Michele Bachmann, R-Minn., a contender for the 2012 Republican presidential nomination.
Across the weeks, Boehner emerged as Obama’s principal Republican antagonist in a new contentious era of divided government, yet struggled to corral his own rank and file at times.
At the end, though, McConnell and Biden, who looked on as Obama announced the deal, provided a negotiating channel to get the deal completed, including a last-minute standoff over the impact of spending cuts on the Pentagon budget.
The plan calls for spending cuts and increased borrowing authority for the Treasury in two stages.
In the first, passage of the legislation would trigger $1.2 trillion in spending cuts over a decade as well as a $900 billion increase in the government’s borrowing authority.
The spending cuts would come from hundreds of federal programs across the face of government – accounts that Obama said would be left with the lowest levels of spending as a percentage of the overall economy in more than a half century.
The increased borrowing authority includes $400 billion that would take effect immediately, and $500 billion that would be permitted after Congress had a chance to block it.
In the second stage, a newly created joint committee of Congress would be charged with recommending $1.5 trillion in deficit reductions by the end of November and put to a vote in Congress by year’s end. The cuts could come from benefit programs such as Medicare, Social Security of Medicaid as well as from an overhaul of the tax code.
The committee proposals could trigger a debt limit increase of as much as $1.5 trillion, if approved by Congress. But if they do not materialize, automatic spending cuts would be applied across government to trim spending by $1.2 trillion.
Social Security, Medicaid and food stamps would be exempt from the automatic cuts, but payments to doctors, nursing homes and other Medicare providers could be trimmed, as could subsidies to insurance companies that offer an alternative to government-run Medicare.
The deal marked a classic compromise, a triumph of divided government that would let both Obama and Republicans claim they had achieved their objectives.
As the president demanded, the deal would allow the debt limit to rise by enough to tide the Treasury over until after the 2012 elections.
But Obama’s request to extend the current payroll tax holiday beyond the end of 2011 would not be included, nor his call for extended unemployment benefits for victims of the recession.
Republicans would win spending cuts of slightly more than the increase in the debt limit, as they have demanded. Additionally, tax increases would be off-limits unless recommended by the bipartisan committee that is expected to include six Republicans and six Democrats. The conservative campaign to force Congress to approve a balanced-budget amendment to the Constitution would be jettisoned.
Congressional Democrats have long insisted that Medicare and Social Security benefits not be cut, a victory for them in the proposal under discussion. Yet they would have to absorb even deeper cuts in hundreds of federal programs than were included in legislation they had advanced in the final days before an agreement was reached.
From USA Today
9:59 PM on July 31, 2011
House Speaker John Boehner, R-Ohio, told House Republicans about the deal and his support for it in a simultaneous conference call. “Now listen, this isn’t the greatest deal in the world,” Boehner said. “But it shows how much we’ve changed the terms of the debate in this
Whatever Boehner. Keep telling yourself you did everything you could. You had the cuts and the people behind you and you chose weak compromise.
He didn’t have the votes
10:01 PM on July 31, 2011
Right wing extremists and left wing purists both hate the proposed deal, so we’ve read in a few news sites. That means the deal is the correct solution. Never appease the dark side of a culture; it didn’t work for Neville Chamberlain and it won’t work for us either.
is that your real name? Tthe dark side is Darth Goldman
10:02 PM on July 31, 2011
Responsible Americans should pray this deal falls through, and instead the debt limit is not raised…
It is immoral and irresponsible to pile more $trillions of debt on Americans and their children…. to pay for more parasitic govt corruption, waste, pork.
Where have you been…no pork…why Boehner had no coercive pwr
10:03 PM on July 31, 2011
I’m speechless !!! Check out this quote
The first top-to-bottom audit of the Federal Reserve uncovered eye-popping new details about how the U.S. provided a whopping $16 trillion in secret loans to bail out American and foreign banks and businesses during the worst economic crisis since the Great Depression. An amendment by Sen. Bernie Sanders to the Wall Street reform law passed one year ago this week directed the Government Accountability Office to conduct the study. “As a result of this audit, we now know that the Federal Reserve provided more than $16 trillion in total financial assistance to some of the largest financial institutions and corporations in the United States and throughout the world,” said Sanders. “This is a clear case of socialism for the rich and rugged, you’re-on-your-own individualism for everyone else.”
Bankers only care about paper, not the real economy
10:04 PM on July 31, 2011
Obama is a failure. Plain and simple.
Dubya was the biggest failure of the century but he got re-elected
10:04 PM on July 31, 2011
Sounds like a very solid deal. It includes all kind of important ideas, no really bad ideas and lots of room for future progress. It’s a good start and hopefully it will lead to even better things soon. Congratulations to both sides for coming up with something, even though you made yourselves and the country look very stupid along the way.
proof is in the pudding
10:05 PM on July 31, 2011
Well three cheers for Obama and Congress! The middle-class taxpayers will now be $2T less than $10T more taxed over the next decade if this legislation passes. BS! No more debt, no more taxes, no more welfare, no more bailouts. Enough already!
10:05 PM on July 31, 2011
The Terrorist Tea Party and the Rad-Libs will throw this one out too… thus giving the President the cover to invoke the 14th amendment.
10:06 PM on July 31, 2011
The deal has the (minority) Republicans giving up nothing and the (majority) Democrats ceding on every point.
And the GOP faithfuls are still complaining…
10:11 PM on July 31, 2011
Blah Blah Blah – “can I buy your vote” – Blah Blah Blah – spend spend spend – Wall Street Welfare – Blah Blah Blah – scrub foodstamp welfare – Blah Blah Blah – spend spend spend. You true believers are in for a nice reduction to your standard of living coming real soon – at least one that will match your intelligence.
great screen name; escaping from reality?
10:11 PM on July 31, 2011
No way the House passes this piece of garbage compromise bill. A trillion in cuts over 10 years – that is $100 billion per year. That is walking around money to the Democrats.
real cuts have yet to determined
10:11 PM on July 31, 2011
For something that needed to be done in a matter of days, this is an excellent deal.
no done deal yet; should have been routine
12:11 AM on August 1, 2011
lol… all you Liberals that reply…
you are are part of the problem…
a disease that is not fixable…
you are what make this country a sick
Fools like U make this country puke
12:13 AM on August 1, 2011
The only good thing about liberalism is it produce Conservativism.
That means ending slavery was wrong; changing thestatus quo
From The Chicago Tribune:
greatgm at 11:11 PM July 31, 2011
The reason for the whole fuss about the debt ceiling that Obama wants to raise is not because Obama wants the debt ceiling raised. It is because he is a black president. Democratic representative Maxine Waters said that she hopes that the whole argument over the debt ceiling is not because we have a president of color in the White House.
Why all the sudden every president before Obama got the debt ceiling raised with no trouble. Now he wants to raise the debt ceiling it is a nationa crisis. Here is the problem. Obama, has made great strides in his presidency. Being the first president to get some kind of national health care plan when other presidents could not do it. He found Osama Bin Laden and killed him when other presidents failed. The economy is still bad but he put in policy to keep the economy from getting worse. You see Obama has done a lot for the country and his approval rating shows it.
So you have a few closet racist white politicians seeing this are upset. They don’t want to see another black president in their lifetime so what do they do? They deny him money to run the government by not allowing him to raise the debt ceiling.
Look I hate the feeling I have but I really think this whole thing is racially motivated. For all you are insulted that is just tough luck. However I really feel this opposition is racially motivated. Period.
JOBS JOBS JOBS – if this country was virulently racist he would not have been elected
apollo at 10:53 PM July 31, 2011
Looks like the extremists of the tea party will soon be expose for what they are.
Their hate for the President goes behind politics, is plain fanaticism’s that units them.
Automatic for the People at 10:44 PM July 31, 2011
What many people (the Tea Party, and the far right on this board) fail to realize is that raising the debt ceiling has NOTHING to do future spending. The debt ceiling is about paying off bills that we (the US govt) have already run up.
It’s shameful that the far right extremist (Tea Party) hammered into peoples mind that the deficit is tied to the debt ceiling. This has never been done before becasue they are two separate issues. However, the Tea Party have managed to blur the lines, convince the Obama Haters and other less sharp people in the right (not the politicans, select people on THIS board).
All this political postering, instigated from the Tea Party may not make us default, but it has exposed us to the worldwide creditors who will probably reduce our cedit rating.
Our economy brought to the brink because of hateful, financially and economically uneducated Tea Party reps got elected by their hick constituents in small town USA….people who still cannot accept that the President is a person of color.
So what would they rather do? Risk tanking the US/World economy in order to push Obama out….a “we had to destroy the village in order to save it” mentality? Great “Country First” attitude. An extremist could almost argue that it constitutes treason.
I hope people will remember them come election time and other Republicans stand up and Push them out the GOP.
WRONG – no hike in the debt ceiling; spending is curtailed
KPOM01 at 9:57 PM July 31, 2011
This is a total victory for Obama. He promised nothing but $1 trillion of “cuts” agreed to weeks ago, and “revenue increases” are still on the table if this “bipartisan” commission recommends them. Meanwhile, the debt ceiling is kicked down the road until after the 2012 elections. The GOP caved on this one, plain and simple.
perception is reality
65cobra at 9:49 PM July 31, 2011
Funny how Mr. No Experience has emerged from doing nothing. It typifies his adminstration – failure. Glad congess got something done.
ump195569 at 10:07 PM July 31, 2011
Idiots like you keep talking about his lack of exoerience. What did Bush have- failed businessman, failed baseball team owner, and governor for a few years? Reagan- actor, sports announcer, and governor for a few years. You guys talk about Obama like he did something wrong. What experience should he have? Americans trusted his experience enough to elect him.
Obama has no leadership skills, i.e. understanding of human nature; Bush had bluster.
65cobra at 10:33 PM July 31, 2011
hey idiot ump, both were govenors. Which means they held they held the executive branch of the two largest states: California and Texas. They accomplished more than you have, or ever will being a little league ump. You are mentaly retarded and would be instituionalized, drinking through a straw, if it weren’t for the pathetic democraps. Wake up stupid or move to Oregon and get back on the bad acid you have been on.
Ronald Reagan = total myth; George Bush = no leader; BO = ditto
DhFabian at 9:28 PM July 31, 2011
Barry3, which govt spending should be cut? How about the highway dept? Schools. We could save a lot of money by shutting down police and fire departments. We’re in a bit of a pickle, you know. We paid of the Reagan/Bush debts by ending aid for America’s poor., so we need to move up the social ladder for more cuts. Libraries? Post offices? National Weather Service? The Navy? Prisons? Or is it irrelevant, since the lion’s share of (over 50%) of all tax dollars sent to the government go into maintaining war(s) and making up the difference for trillions (since Reagan) of dollars of tax cuts for the rich. If we were to get serious about that “big govt spending,” we would have to end the handouts to the rich and draw down our war(s), and that’s not going to happen.
MMMM, no “highway dept”; maybe the Department of Transportation?
CYCLOPS at 8:43 PM July 31, 2011
Congress can’t legislate beyond current terms. Once a democratic controlled House emerges, they will enact new legislation to tax and spend all over again and raise the debt ceiling to say $20 trillion. This is bad news for the US.
Congress ”legislated” Social Security during FDR’s administration.
All Smiles at 8:16 PM July 31, 2011
Obama and the Democrats ONLY want to cut $1 trillion in 10 years despite the fact Standard & Poor said America needs to cut at LEAST $4 trillion in deficit-reduction measures to keep the AAA rating.
Obama and the Democrats are off about $3 trillion. They just want to keep spending and borrowing. If we allow the Democrats to have their way we WILL LOSE our AAA rating.
The only way to solve our economic problems is to VOTE OUT ALL DEMOCRATS UP AND DOWN THE BALLOT!!!!!
2012 – YES WE WILL!!!!
No one really knows
DhFabian at 8:14 PM July 31, 2011
Which low-income people will be sacrificed this time? First it was single adults who were unable to provide for themselves, relying on General Assistance aid. Then we eliminated the entitlement to aid for impoverished women and children. This is America, so we take from those at the bottom to increase the wealth of those at the top. Democracy, you know.
All classes must sacrifice or the country will be sacrificed
wedriscoll at 7:13 PM July 31, 2011
So when Reid says “I will support this if my caucus does” he is hailed as a hero, but when Boehner listens to his caucus he gets blasted for his lack of leadership, because he can’t keep his caucus in line. Reid is the “leader” shouldn’t he be blasted for not whipping his party behind him?
Maybe media bias?
ronald214 at 6:57 PM July 31, 2011
I hope all you folks know this was all smoke and mirrors and theater put on by the boys & girls in Washington. Each side has their “hero” and “Fighter” for the cause. The Dem supporters and the GOP supporters at each others throats screaming insults all the while the folks in DC are laughing their butts off at the “Little People” There was never a chance they won’t get this done however I have lost $4000 in my 401K in the last 2 weeks and that means somebody made $4000. Now when this is over there will be another “crisis” and you all (including me) can get back on our PC’s and argue while the boys and girls go to dinner with a lobbyist.
There’s still a chance; no vote yet