July 31, 2011 9:02 PM

President Obama: Deal reached on debt crisis

By
Joshua Norman, Kevin Hechtkopf
Topics
Economy ,
White House ,
Congress

President Barack Obama pauses as he speaks from White House briefing room, Sunday, July 31, 2011 in Washington, about a deal being reached to raise the debt limit.

(Credit: AP)

Updated Aug. 1, 7:28 a.m. EST

President Obama announced on Sunday night that an agreement with Republicans has been struck to raise the debt ceiling, preventing what would have been a first-ever default by the U.S. government on its financial obligations. The agreement now awaits approval by Congress, which could happen as early as Monday.

The deal would increase the debt ceiling by more than $2 trillion in two stages which will last through the 2012 election, a key demand for Mr. Obama and Democratic leaders.

As for spending cuts, about $1 trillion over 10 years would be cut now from the federal budget, with a similar increase in the debt limit now. In addition, a new special congressional committee made up of members from both parties and both houses of Congress would be tasked with coming up up with $1.5 trillion in further deficit reductions by Thanksgiving, which can include cuts from entitlement programs (Social Security, Medicare and Medicaid) and tax reform. If the committee fails to reach that target, or Congress doesn't pass the recommendations by the end of 2011, the debt limit could also be increased if Congress sends to the states a balanced budget amendment to the Constitution, a key demand for many conservatives in the debt fight.

If the amendment also fails, the deal calls for automatic spending cuts to defense and domestic programs totaling $1.2 trillion, with an accompanying debt limit increase. According to the White House, these cuts "would be unacceptable to many Republicans and Democrats alike" which would create pressure for Congress to come to agreement.

"Is this the deal I would have preferred?" Mr. Obama asked during his remarks. He answered his own question: "No."

But he still backed the deal, saying it "will allow us to avoid default and end the crisis that Washington imposed on the rest of America. And it will allow us to lift the cloud of debt and uncertainty."

Mr. Obama said the deal will result in the lowest level of domestic spending since the Eisenhower administration in the 1950s, but added that it was "at a level that still allows us to make job-creating investments in things like education and research." (Watch Mr. Obama's remarks at left)

In his remarks, Mr. Obama also still clung to his idea of a "balanced" approach to lowering U.S. debt, which would include both cuts to entitlement programs and revenue-increasing measures aimed at the rich. Though he said "everything will be on the table" in the bipartisan committee, it appears unlikely Republicans in Congress would ultimately support tax increases as part of the final package.

"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," Mr. Obama added.

Immediately before Mr. Obama's remarks, Senate Majority Leader Harry Reid and Senate Republican Leader Mitch McConnell came to the Senate floor to announce they had an agreement.

"I know this agreement won't make every Republican happy. It certainly won't make every Democrat happy, either," Reid said. "Both parties gave more ground than they wanted to. And neither side got as much as it had hoped. But that is the essence of compromise. And the American people demanded compromise this week."

House Speaker John Boehner conducted a conference call with House Republicans on Sunday night to explain the deal to them, where he trumpeted the GOP's influence in the debate.

A participant on the call told CBS News that Boehner discussed his handling of the negotiations and how the White House had to cave on several issues, stating, "Remember how this all started: the White House demanded a "clean" debt limit hike with no spending cuts and reforms attached. We stuck together, and frankly made them give up on that."

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When one conference call participant told Boehner that he'd "scored an eagle on the 18th hole and won the U.S. Open," the speaker, an avid golfer, said that's how he felt.

However, it is unclear how much support the agreement will have in the House, where conservatives and liberals have both been holding fast to their principles in recent weeks. Members from both wings of the two parties have said they would not vote for parts of the agreement agreed upon from their party leaders.

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One prominent Tea Party-backed Republican, Rep. Michele Bachmann, who is also running for the GOP presidential nomination, already announced her opposition to the deal shortly after it was announced.

"The President continues to press for a 'balanced approach,' which everyone knows is code for increased spending and taxes. Throughout this process the President has failed to lead and failed to provide a plan. The 'deal' he announced spends too much and doesn't cut enough. This isn't the deal the American people 'preferred' either, Mr. President. Someone has to say no. I will," Bachmann said in a statement. Bachmann was one of a few dozen Republicans who also opposed Boehner's plan, which passed the House on Friday but was rejected by the Senate.

The bill also doesn't have the support yet of House Democratic Leader Nancy Pelosi, who said in a statement that she was "reviewing" the plan.

"We all agree that our nation cannot default on our obligations and that we must honor our nation's commitments to our seniors, and our men and women in the military," she said. "I look forward to reviewing the legislation with my Caucus to see what level of support we can provide."

While Pelosi was lukewarm toward the plan, Rep. Emanuel Cleaver, chairman of the Congressional Black Caucus, was vociferous in opposition, calling it a "sugar-coated Satan sandwich."

Votes on the plan in the House and Senate are expected soon ahead of the August 2 deadline to increase the debt limit or risk default, but are not yet scheduled as members of both houses review the deal. The Senate will likely vote first as party leaders in the House try to corral the necessary votes.


Add a Comment See all 243 Comments
by bll011 August 2, 2011 8:15 PM EDT
Despicable! Republicans went home without dealing with the FAA-leaving 60,000 people furloughed. What republicans are doing to this country is beyond horrible. Do you really expect republicans to do anything to improve the job picture? Forget it. What do you want to bet that uninformed people will blame President Obama rather than these awful republicans who put fellow citizens out of work on purpose, and hate the government they are suppose to be serving.
Reply to this comment
by agnesdeo August 2, 2011 10:46 AM EDT
Our Wisconsin Senator Ron Johnson was voted against this bill commented: "President Obama requested a $2.4 trillion increase in the debt ceiling. To put that amount in perspective, it took over 200 years for America to incur that level of debt - from our nation's founding to September 30, 1987. Because of President Obama's out-of-control spending, his $2.4 trillion debt ceiling increase will only last until March 2013. At that time, our total debt will be $16.7 trillion - about the same size as the entire U.S. economy. Our debt to GDP ratio will be 100 percent. This is a key measure that signals very real financial danger.

"Unfortunately, President Obama and his Democrat allies in the Senate refuse to acknowledge this danger by agreeing to serious reforms. Instead, the Budget Control Act will only reduce spending in the first year by $21 billion (0.6 percent of the total budget, and less than 1 percent of the increase in the debt ceiling). The total amount of deficit reduction is $1.6 trillion less than the rating agencies indicated would be required to prevent a downgrade in the U.S. debt rating.
In other words, this debt bill is only one very small step toward stopping Prez. Obama's socialistic attempt to bankrupt our nation.
Reply to this comment
by Truth_Tracker August 2, 2011 10:37 AM EDT
The Super Wealthy got everything they wanted, no questions asked, with the "TARP-Banks-Wall Street-Auto Industry" bailouts. The Super Wealthy got a humongous Welfare Check last December when the Bush Tax Breaks for the Super Wealthy was renewed. And NOW, we are told, they are getting everything they wanted yet again, namely, a complete exemption from having to share in the onerous burden of reducing the deficit, because there's no potential here for a roll-back of their Bush Tax Breaks (Welfare Benefits) for the wealthy.

The U.S. media refuses to even deem this to be significant, probably because THEY benefit tremendously from those "Welfare for the Wealthy" hand-outs and they surreptitiously silence the issue by shifting focus to the "Default Crisis" - with the curt remark "something for everyone to hate," and with the errant national anthem "pass anything - anything is better than default." Well there's nothing in this plan for the Super Wealthy to "hate." The super wealthy are the only ones being rigorously represented in Congress, in the White House or in the media.
Reply to this comment
by silveradocool August 2, 2011 5:51 PM EDT
Very well said.
by fedupworkinwoman August 1, 2011 10:42 PM EDT
I'm happy in the fact that my parents, who earned their SS checks through years of hard work, will get their measley little checks this month. But I'm not impressed with the fact that there is now a "new" group of decision makers in place to decide where to make all the additional cuts to SS, medicare and medicade. You never hear all them rich folks up there in Washington even consider their wages as a possible place for spending cuts! They make a whole lot more than the poor folks trying to merely survive on what they get every month. Let them crooks up in Washington miss a few checks. That would help our spending and debt tremendously. But OMG, can you imagine the travesty that would create? Talk about panic!! Why, they wouldn't be able to survive but the people on SS are expected to survive and be thankful to have what they get!! This nation is in big trouble!!!
Reply to this comment
by noloyalisti August 1, 2011 5:30 PM EDT
Quit the bull and let's get on with the jobs program. And I don't mean the military jobs.
Reply to this comment
by tinktm August 1, 2011 3:51 PM EDT
We talk too much about raising taxes and cutting spending when the fact is all we need to do is refine the current government programs to reduce wastefull spending.

Mismanagement of tax payer revenues are rampant through-out the United States. Let's take a surgical knife and review each program on it's own merit and remove those things that are broken.

Think about it: I live in Ft. Lauderdale, does every Miami and Miami Beach police officer have public transportation? I see a lot of patrolmen who live in mt neighborghood driving police cars to and from work. At my expense.

I'm not knocking cops, they are just one thing that comes to mind because I'm looking at two of the cars parked in the driveway across the street.

How about looking into the 168 countries we give foreign aid to every year to the tune billions? 1/2 of them don't even like us. Let's cut some spending there ay?

I'm thinmking outside the box, but what about a loan modification? Why can't we ask for a 1/4% since we been such a loyal customer? Works for me when I call my creditors.

How about the entitlement programs? Is this guy and 10,000 others (white and black and yellow) worth the 700 million we pay them every 3 years?

http://www.youtube.com/watch?feature=player_embedded&v=J7XA2UUpXRk
Reply to this comment
by WorkingSlob August 1, 2011 3:50 PM EDT
How's that Obama thing working out for ya?. I'm no fan of George W. but if he had hid the way Obama did during this fiasco the liberal media would have been ripping him apart. And where is Biden? He seems to be doing a Dick Cheney disappearing act since the crisis emerged. Great leadership!
Reply to this comment
by karek40 August 1, 2011 3:30 PM EDT
Lets see they could not agree on raising the debt, they can't agree reducing spending or even on a budget but they will select a bipartisan group and task them to come up with an additional 1.5 trillion in budget cuts. Yeah right, what are the odds of that working. Too many professional politicians, not enough what is in the best interest of this nation.
Reply to this comment
by slappy_mcjohnson August 1, 2011 3:26 PM EDT
by brianbwb2015

I find it amusing to hear those who say "racism is over, because we have a "black" president", that is like saying that because I killed a rattlesnake, that there are no more cobras in Thailand.

The funniest part of your umbrage is that anyone pointing out the disparity, its cause, examples, and possible remedies, is branded by you as being racist.

It seems you, like so many other "passive racists" would rather we say nothing, and accept it as "the way things should be", simply because you feel uncomfortable hearing about it.

============

Wow - after ALL of that, you STILL don't understand my point.

I dislike RACISM and RACISTS - and YOU are a racist.

I'm not uncomfortable hearing about it, you moron - I see it every day. But when it's off topic and you use it to whine and play the victim EVERY time you're on here, it gets old

So you're a racist against the evil white man. Perhaps you failed to read my previous comments in that I live in an area where the Mexicans dislike the Kurdish and vice versa. Racism happen - I just don't need RACISM FROM YOU ON HERE.

You're a whiner, playing victim. Stand up and take responsibility for your "here and now".

I was raised to see skin color as important as eye color. Too bad you were raised to HATE.

.
Reply to this comment
by slappy_mcjohnson August 1, 2011 3:54 PM EDT
Do you whine about everything in your life, or just about your hate for white people?
by noloyalisti August 1, 2011 2:56 PM EDT
We knew all along that Obama would kneel down to the billionaire fascists. The only thing that will save us now is massive general strikes.
Reply to this comment
by nottblu August 1, 2011 5:16 PM EDT
there are billionaires and "billionaire fascists" the latter would be the billionaires that are democrats.
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