U.S. President Barack Obama has reached an agreement with congressional
leaders on a compromise deal to raise the nation’s limit on borrowing
and keep the government from an unprecedented default.
Obama speaks in support of a bipartisan deal to reduce the nation's
deficit and avoid default.
Mr. Obama said Sunday night that the proposed deal cuts about $1
trillion in spending over 10 years and sets up a bipartisan panel in
Congress to consider up to $1.5 trillion in further reductions. He said
that panel will consider all options, including tax increases and cuts
to social welfare programs like Medicare. If the panel fails to reach
agreement, then the deal requires automatic spending cuts.
Congress must still approve the compromise, which is expected to pass
the Senate which is controlled by Democrats. The deal is expected to
face more opposition in the Republican-led House. A vote could come
Monday, and congressional leaders from both parties say they expect to
have enough votes to approve the deal that would raise the $14.3
trillion limit on U.S. borrowing.
The president called the proposal a compromise that lets the country
avoid default while making a serious down payment on deficit reduction.
He said default would have a “devastating effect” on the U.S. economy.
The White House says the agreement would avoid the need for another vote
on raising the the debt limit until 2013, providing greater “certainty”
about the fragile economy. It would also delay the issue until after the
next U.S. presidential and congressional elections.
As congressional leaders argued about raising the debt ceiling last
week, U.S. stock markets suffered their worst losses of the year and the
value of the dollar slumped.
sides agreed on the need to cut spending and raise the debt ceiling. But
they have squabbled for weeks on what to cut and how fast those cuts
should be made. Republicans and Democrats also split on the need for
Under the proposed agreement, the congressional panel must identify the
additional budget reforms by November 23, and Congress must vote on the
recommendations before the end of the year.
To encourage lawmakers to act by the deadline, the agreement includes
the prospect of automatic cuts to social programs supported by Democrats
and military spending favored by Republicans.
The White House said allowing the panel to consider reforms without a
looming debt default will give lawmakers the ability to consider
“essential reforms” without the political gamesmanship of the past few