President Obama and congressional Republican and Democratic leaders announced Sunday evening that they have reached an agreement on a plan to end the debt-ceiling crisis that calls for more than $2.5 trillion of spending cuts and savings over the coming decade but no increase in tax revenues.
The president and congressional leaders sought to assure the public that despite the months of political wrangling, the Treasury would not default on U.S. debt – a prospect that for weeks has roiled the international financial community and raised the possibility that the government would run out of cash to pay its creditors and contractors.
“My message to the world tonight is that this nation and this Congress are moving forward and we are moving forward together,” Senate Majority Leader Harry Reid of Nevada said from the floor of the Senate.
“At this point I think I can say with a high degree of confidence that there is now a framework that will insure significant cuts in Washington spending, and we can assure the American people tonight that the United States of America will not for the first time in our history default on its obligations,” added Senate Minority Leader Mitch McConnell, R-Ky., a pivotal player in the final round of negotiations, said on the Senate floor.
Obama in remarks from the White House a few minutes later expressed relief that the political impasse over the debt ceiling at last appeared to be drawing to a close, but he voiced irritation with the “messy” and highly combative negotiation process, and complained that the two parties could have achieved considerably more if they had been more cooperative.
The president also indirectly acknowledged that the Republicans may have gotten the better end of the deal in blocking Obama’s efforts to include tax increases as well as spending cuts in the framework for achieving long term deficit reduction, but he vowed to continue to press for changes that would force wealthy Americans to share in the burden of reducing the debt when a special joint committee of Congress pulls together recommendations to Congress for long term savings this fall.
“I’ve said from the beginning that the ultimate solution to our deficit problem must be balance,” Obama said. “Despite what some Republicans have argued, I believe that we have to ask the wealthiest Americans and biggest corporations to pay their fair share by giving up tax breaks and special deductions. And despite what some in my own party have argued, I believe that we have to make modest adjustments to programs like Medicare, to assure that they are still around for future generations.”
“Now, is this the deal I would have preferred? No,” he added. “I believe that we could have made the tough choices required on entitlement reform and tax reform right now, rather than through a special congressional committee process, but this compromise does make a serious down payment on the deficit reduction we need and gives each party a strong incentive to get a balanced plan done before the end of the year.”
“Most importantly, it will allow us to avoid default and end the crisis that Washington imposed on the rest of America,” he said. “It insures also that we won’t face this same kind of crisis again in six months or eight month or twelve months.”
During an 8:30 p.m. conference call with House Republicans, House Speaker John Boehner used a seven-page PowerPoint presentation to stress to his members that Republicans got just about everything they were seeking in the negotiations: deep spending cuts, no tax increases and another vote on a balanced budget amendment to the Constitution.
The plan would authorize the president to raise the debt ceiling immediately by $900 billion, through next February, while imposing $918 billion of spending cuts. A 12-member joint committee would be created and required to report legislation by next November 23 that would produce a proposal to reduce the deficit by at least $1.5 trillion over 10 years. Each chamber would consider a joint committee proposal on an up-or-down basis without any amendments by December 23.