Roach

WASHINGTON — President Barack Obama announced on Sunday that Democrats and Republicans leaders have reached an agreement to reduce the U.S. deficit and avoid default.

Obama said the agreement will cut about $1 trillion over 10 years.

The bipartisan plan will be presented to Congress on Monday, Senate Majority Leader Harry Reid said.

"Leaders from both parties and in both chambers will present this agreement to our caucuses tomorrow," Reid said on the Senate floor.

"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."

Earlier in the day, Reid had warned that "as we know, one problem can stop the whole agreement from going forward.”

And one potential obstacle seemed to be developing: the size of cuts to military spending that might be forced by a "trigger" if Congress couldn’t meet certain deficit reduction targets on its own.

House Armed Services Committee Chairman Buck McKeon, R-Calif., and other GOP advocates for the military warned last week against further reductions to military outlays on top of the $400 billion that President Barack Obama has sought over the next 12 years.

Independent Democrat Sen. Joe Lieberman of Connecticut issued a statement Sunday saying he was "very concerned about rumors that the debt agreement now being negotiated will disproportionately cut defense spending."

Speaking later Sunday, House Democratic Leader Nancy Pelosi said it was unclear whether House Democrats would back the deal. "We all may not be able to support it, or none of us may be able to support it. But we'll wait and see," Pelosi told reporters.

The Congressional Budget Office has forecast that over the next 10 years defense spending will grow at an average rate of 2.3 percent a year, while Medicare will grow by nearly 7 percent a year, Medicaid by 9 percent a year and Social Security by nearly 6 percent a year.

Republicans such as McKeon would like to see the growth of those entitlement programs reined in, while shielding the military from cuts.

Negotiations with White House officials continued as the clock ticked toward Tuesday, the day when Treasury Secretary Tim Geithner has said the government will reach its borrowing limit and be forced to operate solely on its daily cash inflow. It would be unable to pay all its bills and would face an almost certain downgrade by bond ratings agencies such as Standard & Poor's.

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.

Reid said that as part of an accord, a 12-member joint congressional committee will be created and given the task of achieving further deficit reduction, once a first round of cuts has been made. “There are no constraints. It can look at any program we have in government,” Reid said of the new committee. “It will be essential to choose members with open minds willing to consider every option, even when the options are difficult to swallow for both parties.”

Estimating the vote count
Even before all the details of the accord were revealed on Capitol Hill, calculations were being made of potential support in the House.

With 433 House members and two vacancies, a bill would need 217 votes to pass, if all members vote.

The head of the 74-member Congressional Progressive Caucus, Rep. Raul Grijalva, D- Ariz., said he’d oppose the agreement which, he said, "trades peoples' livelihoods for the votes of a few unappeasable right-wing radicals."

On the other side of the spectrum, it was not clear how much opposition there might be from advocates for the military and from the 59-member Republican Tea Party Caucus.

Even if all the Progressives and all Tea Party members were to vote ‘no,’ the opponents of the plan would still need to persuade 84 more House members to join with them in opposition in order to defeat the proposal.

As of Sunday, none of the congressional leaders was talking about expiration of the current income tax rates on Dec. 31, 2012 — that battle will apparently be fought next year in the midst of the election as President Barack Obama seeks his second term. Obama has been seeking higher income tax rates on those earning more than $250,000 a year.

Obama adviser David Plouffe on NBC's Meet the Press, outlined the structure of an agreement between Obama and congressional leaders.

It would require an initial round of $1 trillion in deficit reduction, mostly or entirely coming from spending cuts, followed by work by the new congressional committee to recommend even deeper deficit reduction which would be achieved, said Plouffe, through “entitlement reform and tax reform.”

Plouffe said the committee would be mandated to recommend specific spending cuts, but it “is not going to be charged with just doing spending cuts only. The committee is going to be charged looking at our entire deficit reduction problem and look at things like tax reform and revenue.”

Plouffe indicated that Obama was sticking to his insistence that any agreement raise the debt limit through the end of 2012. Plouffe said, “This debt ceiling cloud has harmed our economy. Why on earth would we want to go through this again a few short months from now?”

If the borrowing limit is reached, Geithner has said, the government will be forced to make a 40 percent cut in outlays. Geithner has been unwilling to discuss in public how the Treasury would manage its cash if it exhausts its borrowing ability.

But Bloomberg News reported Friday that the Treasury would give priority to making interest payments to holders of Treasury bonds if lawmakers fail to reach an agreement to raise the debt ceiling.

The standoff over raising the $14.3 trillion debt limit comes at a time when data are pointing to persistent economic weakness and when business leaders are voicing worry that a disruption of bond markets would make matters worse.

The government reported Friday that in the first quarter of the year the economy grew by only 0.4 percent.

David Beers, the global head of sovereign ratings at the bond rating firm Standard & Poor’s, said last week that reaching the debt limit “would not be default so long as the government is continuing to pay its debt as it matures and its interest payments.”

But the government being unable to borrow, and the resulting cut in outlays, would be, Beers said, “a very sudden fiscal shock that, the longer it lasted, would filter powerfully through the system… Potentially that would be deeply disruptive to the economy.”
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Obama has given in completely to the big business backed republicans.
He's also given up any chance of re-election.
He made some nice promises, but lacked the backbone/support to accomplish those pipe dreams.

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לזיין את הקופים

Cerpin Taxt

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Step Back. Evaluate. Recognize.

"All memory is really a form of regurgitation of undigested experience."
-Alan Watts

Roach

well with the asian markets approval, american markets should rally today and gain back some of the nearly 600 points they lost last week.

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לזיין את הקופים

kamikazi89

this guys making Reagan seem more and more progressive with each passing day..do you think he wakes up each morning fretting over which white flag he'll fly that day?

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katie west is the best

Roach

most likely

but the market watchers were wrong about american markets following asian markets by having a short (several day) rally...it lasted less than 15 minutes.

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Today may go down as the shortest relief rally ever. The stock market opened sharply higher thanks to Sunday's debt-ceiling deal between the White House and leaders in Congress, with the Dow Jones Industrial Average ($INDU) up as many as 136 points by 9:45 a.m.

Shortly after 10 a.m., the rally fizzled. Gone. Kaput. And by noon ET, the blue chips were down 145 points, briefly falling below 12,000 for the first time since March before a bounce-back set in.

Reversals this violent are rare. Today is only the 10th time since 1985 that the Standard & Poor's 500 Index ($INX) had risen 1% in the first half hour of trading and had lost all of it in the next half hour, according to Bespoke Investment Group.

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לזיין את הקופים

stoneric

I'm moving to israel. Might as well go somplace where my tax dollars are being spent on social programs.

cantSEEme

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kamikazi89

you know what gets me, if the republicans were really serious about curbing spending they woulda taken the "grand bargain"..but no, they were so intent on maintaining the status quo as far as tax reform goes they settled for "super committees" instead

just plain dumb

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katie west is the best

SageTree

IMO, term limits are one of THE most important things that needs to be talked about.
Not just federally either.

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kamikazi89

i'm not a fan of term limits(they already exist, people don't choose to use them)i.e. the ballott box

i gotta go, i look forward to reading this upon my return

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katie west is the best