Bi-Partisan Debt Ceiling Agreement and Deficit Reduction Plan Reached; Passes in the House
August 1, 2011
Bi-Partisan Debt Ceiling Agreement
The plan, according to those familiar with it, calls for spending cuts and increased borrowing authority for the Treasury in two stages.
In the first stage, 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 discretionary programs across government. 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 vote on it.
In the second stage, a newly created bi-partisan, bi-cameral joint committee of Congress with 12 members would be tasked with recommending $1.5 trillion in deficit reductions by Nov. 23, 2011 and put to a vote in Congress by Dec. 23, 2011. The cuts could come from benefit programs such as Medicare, Social Security or Medicaid, as well as from an overhaul of the tax code.
The committee proposals could trigger a debt limit increase of $1.2 trillion to $1.5 trillion, if approved by Congress. But if they do not result in a $1.2 trillion deficit reduction plan, automatic spending cuts would be applied across government to trim spending by a like amount, including Medicare. However, Social Security, veterans, Medicaid, and civilian and military pay would be exempt. These cuts would apply to FY2013-2021. Total reductions would be split evenly between defense and non-defense.
This plan would defer the need for another debt ceiling increase until 2013.
As part of the agreement, a balanced budget constitutional amendment will be voted on by the House and Senate - after Oct. 1, 2011 but before the end of the year.
Debt Ceiling and Deficit Reduction Plan Passed in the House
The U.S. House of Representatives passed the debt ceiling and deficit reduction plan this evening. The vote was 269 to 161 with 174 Republicans and 95 Democrats voted for the measure and 66 Republicans and 95 Democrats voted against the measure.
While the Senate initially was expected to begin consideration of the bill early this afternoon, the House moved first on the bill, which was a technical amendment to the Education Sciences Reform Act legislation (S. 365). The amendment substituted the bipartisan agreement (Deficit Control Act).
Given the latest whip count has between 230-233 House members in favor of a deal (only 216 are required for passage), we expect that it will pass and be sent to the Senate, at which point Majority Leader Harry Reid can call it up immediately, and, if a consent agreement limiting debate doesn't exist, file cloture on the motion to concur with the House bill.
While it is possible the Senate will not vote on the House bill until tomorrow or even later in the week, experts believe that the Senate will pass it tonight or tomorrow.
Special note – Representative Gabrielle Giffords (D-8th-AZ) was back on the floor for the vote – she voted in favor of the measure. After the vote was completed, she was cheered by both sides of the aisle.
Sources: Wall Street Journal, Congressional Quarterly and Patton Boggs
