It’s up to the House of Representatives to avoid a national calamity.
Congressional leaders and President Obama reached a deal tonight to prevent the country from defaulting on its massive debt — sparing millions of Americans from higher price tags on gasoline, mortgages and interest rates on their credit cards.
"There are still some very important votes to be taken by members of Congress," President Obama cautioned last night in a TV address announcing the agreement on a deal with nearly $3 trillion in spending cuts.
"Is this the deal I would have preferred? No," Obama admitted. "But this compromise does make a serious down payment on the deficit reduction we need."
He also vowed to keep pressure on lawmakers to agree to tax hikes opposed by the GOP — and entitlement reforms opposed by Democrats.
The Senate is expected to take up the plan today, with Democrats and Republicans meeting separately this morning to rally support for the bargain.
"This is an important moment for our country," said Senate Minority Leader Mitch McConnell (R-Ky.) "I think I can say with a high degree of confidence that there is now a framework .¤.¤. that will ensure significant cuts in Washington spending."
The tough hurdle is in on the other side of the Capitol, where House Speaker John Boehner (R-Ohio) and House Minority Leader Nancy Pelosi will have to get enough votes from both parties to pass it.
"This has been a long battle – we’ve fought valiantly – and frankly, we’ve done it by listening to the American people," Boehner told House Republicans in a conference call last night.
"As a result, our framework is now on the table that will end this crisis in a manner that meets our principles of smaller government.
"This isn’t the greatest deal in the world. But ... it shows how much we’ve changed the terms of the debate in this town."
The House of Representatives is still a wild card.
That includes a band of 40 or so Tea Party members who have so far adamantly refused to approve any deal including the possibility of deep cuts to Pentagon spending — triggered automatically under the plan if there’s no agreement on future cuts.
Also in question are a cadre of about 80 House Democrats who so far have refused to approve any plan that includes the possibility of deep cuts to social-service programs like Social Security and Medicare. Those cuts also could be triggered in the future.
Boehner haggled into the evening over specifics of defense cuts.
The deal hammered out by McConnell and Biden would raise the $14.3 trillion debt limit in two phases: an immediate $900 billion increase followed by a $1.5 trillion hike next year.
It also grants Obama temporary authority to up the debt limit without Congress’ approval.
The plan calls for spending cuts of at least $2.7 trillion over 10 years, also executed in two steps.
First, the deal immediately institutes $1.2 trillion of spending cuts.
At least another $1.5 trillion in cuts are to be identified by a bipartisan committee by Thanksgiving.
If Congress fails to pass the cuts by Dec. 23, it triggers $1.5 trillion in automatic spending cuts to prized programs including the Pentagon and Medicare providers.
These "triggers" are a key element of the deal and had been a main sticking point in negotiations for weeks.
It holds a hammer over the special committee as it considers hot-button issues, such as reforming the tax code, Social Security, Medicare and Medicaid.
Desperate to make the deal, Obama made his third major concession to Republicans in as many months.
This time he surrendered his objection to a two-stage debt-limit increase, just as he previously gave up demands for added tax revenues and for an increase with no spending cuts.
The $2.7 trillion in cuts likely are big enough to calm financial markets, but they won’t necessarily stop a ruinous credit downgrade.
The Nikkei average surged today, climbing back above 10,000 for the first time in three days after the agreement was announced. |
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