The Golden Report

THE WHITE HOUSE

Office of the Press Secretary

FOR IMMEDIATE RELEASE

August 2, 2011

Statement by the Press Secretary

On Tuesday, August 02, 2011, the President signed into law:

S. 365, the “Budget Control Act of 2011,” which provides for authority to increase the public debt limit by between $2.1 trillion and $2.4 trillion; establishes discretionary spending limits for FYs 2012-2021; requires the House and Senate to each vote on passage of a balanced budget amendment to the Constitution; and establishes a congressional Joint Select Committee on Deficit Reduction.

A photo of the signing is available HERE

(Source: whitehouse.gov)

This is one of the best summaries of the debt deal that I’ve seen so far. It is from House Democratic Whip Steny Hoyer’s office:

The first part of the plan includes approximately $1.2 trillion of deficit reduction through the establishment of ten-year discretionary caps. In the first two years, there would be a firewall separating security and non-security spending. Total discretionary spending in Fiscal Year 2012 and 2013 will be limited to $1.043 trillion and $1.047 trillion, respectively, about $7 billion and $3 billion below Fiscal Year 2011. The security savings would represent roughly $5 billion of the total $10 billion in reductions over this two year period. 

The plan provides for debt ceiling increases in two stages. The President may request a $900 billion increase now, of which $400 billion is immediately available. This $900 billion is subject to a resolution of disapproval in both the House and Senate. The disapproval measure would be subject to Presidential Veto.  Once the debt comes within $100 billion of the debt ceiling, the President may ask for at least an additional $1.2 trillion, which could rise to $1.5 trillion if a Balanced Budget Amendment is sent to the states or the Joint Committee process described below enacts more than $1.5 trillion in savings.  This increase is also subject to a resolution of disapproval. 

The legislation creates a Joint Committee tasked with achieving $1.5 trillion in deficit reduction. A joint, bipartisan committee, made up of 12 members (6 from each Chamber, equally divided between Democrats and Republicans, and appointed by the Majority and Minority Leaders in each Chamber), will be tasked with developing legislation to achieve at least $1.5 trillion in future deficit reduction by Thanksgiving. The committee’s legislation, which can include entitlements and revenues, will be guaranteed an up-or-down vote in both chambers, without amendments, by December 23.

If the Committee’s recommendations achieve at least $1.5 trillion and are enacted by Congress, the debt ceiling will be raised by $1.5 trillion. If the committee’s bill is enacted and produces between $1.2 trillion and $1.5 trillion, the debt limit will be raised dollar-for-dollar. If the committee fails to produce a bill, its bill is not enacted, or it produces less than $1.2 trillion, the debt limit will increase by $1.2 trillion. Regardless of the amount of the debt limit increase, it would be subject to a disapproval vote which would, in turn, be subject to a Presidential Veto. If the Joint Committee fails to come to a majority agreement on recommendations that achieve at least $1.2 trillion, or Congress fails to enact recommendations that produce at least that amount, sequestration is triggered, forcing across-the-board spending cuts. 50 percent of those cuts forced by sequestration would apply to defense spending in function 050. The other 50 percent would come from non-defense discretionary and mandatory spending with exemptions for many programs.  Social security, Medicaid, veterans’ benefits, and other essential benefits are exempt from cuts. Medicare savings are not totally exempt, but would be capped at 2% and are limited to Medicare providers only – the sequester would not cut benefits. 

Finally, as part of this legislation, both the House and Senate will vote on a balanced budget constitutional amendment before the end of the year. The plan does not make the debt limit increase contingent on passage of the amendment. Nor does it prevent a vote on an alternative version of the balanced budget amendment.

(Source: democraticwhip.gov)

After many hours today as the framework of the deal leaked- we have now gotten confirmation that, indeed, a deal has been reached between the White House and Congress to raise the debt ceiling and, at the same time, reduce the debt ceiling by some $3 trillion over 10 years.

I’ll post the video of the President’s remarks tomorrow as soon as the video is online. For now, here is the official White House Transcript. 

Next steps:

Democratic and Republican caucus meetings in both the House and the Senate tomorrow. And then votes. Unclear which chamber will move first tomorrow with a vote. But it does look like the biggest vote to watch will be in the House of Representatives- where 216 votes are needed to pass, and where it will likely need to be put together with a coalition of Democratic and Republican votes. 

We’ll watch to see if the President makes a further statement tomorrow- or answers questions- or waits until after the Congressional votes to do so. 

There are going to be a lot of statements from a lot of members of Congress tomorrow.

We’ll also watch to see how Wall Street reacts when it opens at 9:30am. Asian markets, that had been down at their open tonight, were sharply higher after the President’s briefing room statement. 

Political fallout will take a while to assess. Already, 2012 presidential candidate Michelle Bachmann is out with a statement blasting the deal. Watch to see how the other candidates (and potential candidate, Rick Perry), respond. 

So- tonight- we have a deal. And, for now, the immediate debt ceiling crisis is over. These past few weeks of negotiations, however, have been defining. For politics, policy & economics- they will define the immediate future. 

President Obama just spoke in the Press Briefing Room on an agreement reached between the Administration and Congressional leaders to raise the debt ceiling and reduce the national debt.

Details on the deal are coming out.

Harry Reid and Mitch McConnell spoke on the Senate floor shortly before the President.

This comes as Asian markets are opening and as the countdown to a potential default of the United States approaches on Tuesday. 

Here’s how the rest of Saturday shaped up.

Boehner & McConnell held a news conference after the House vote to defeat the Reid bill that sounded more optimistic. The language had shifted, they said the White House had become more engaged and they were hopeful a deal could be struck and the US would not default. 

Reid & Pelosi went to the White House for an hour and a half meeting. When he came back, Reid called the Senate back to the floor to tone down reports of a deal.

A few hours later, as the tentative framework for a deal emerged, Reid canceled the planned 1am cloture vote on his debt ceiling increase proposal. A sign that negotiations were continuing and that the vote would have been a pointless exercise.

According to reporting by National Journal’s Major Garrett, here are the frameworks for a deal as currently being negotiated:

• $2.8 trillion in deficit reduction with $1 trillion locked in through discretionary spending caps over 10 years and the remainder determined by a so-called “Super Committee.”
• The Super Committee must report precise deficit-reduction proposals by Thanksgiving.
• The Super Committee would have to propose $1.8 trillion in spending cuts to achieve that amount of deficit reduction over 10 years.
• If the Super Committee fails, Congress must send a balanced-budget amendment to the states for ratification. If that doesn’t happen, across-the-board spending cuts would go into effect and could touch Medicare and defense spending.
• No net new tax revenue would be part of the special committee’s deliberations.

On the Sunday morning news shows this morning, both sides are sounding optimistic- with McConnell saying “we’re very close to a deal.” The line from the White House & Democrats is “nothing is agreed upon until everything is agreed upon.” Clearly, negotiations on details continue.

How might this work, technically?

A short term extension in the debt ceiling of a couple of days/weeks. [look to see if it is a “clean” increase or w/ associated cuts]. The Senate will likely use the Military Affairs Appropriations Bill currently under consideration as a vehicle for passage. Important: if the deal falls apart between now and when that short term expires, we could be in this situation all over again. But just like the budget shutdown this spring, probably won’t happen. 

Reaction from both sides:

Neither side is going to like this. It doesn’t contain the hard-line positions of either party. It might even be a stretch to call this a deal. It is the only way the Congress could come up with to raise the debt ceiling given the current stalemate. It will be hard for anybody to portray this as a political victory; there are no winners. But there are losers- and that goes back to how people behaved during this weeks and months of negotiations. That will likely be what voters remember at the next election, if the extent of this deficit reduction does not effect them personally. 

We do know this- and this has been said throughout this debate. We live in enormously consequential times. These negotiations- and this deal- are defining. They reset the political, economic and social debate in our country and will have ramifications for years, and decades, to come.