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WASHINGTON D.C.-The debt ceiling crisis showed signs of easing up as the country moves to within a a day of the Obama announced deadline. What's in the deal? Obama and the Senate Democrats agree to no revenue increases, and the Republicans in the House would agree to raising the debt ceiling in one stage rather than two.
In the 11th hour, Obama dropped his insistence that the negotiations include revenue increases, with increases mainly aimed at the wealthiest Americans. This will now relegate any talks of revenue increases until after the 2012 elections. In return, the Republicans will not insist that they be allowed to give some now and wait for cuts and debate on further increases at the end of the year. This now delays any more debate until after the 2012 election as well.
The deal that is being looked at Monday will reduce deficits by an estimated $2.5 trillion over a decade. This will be accomplished by capping defense and domestic spending, which over ten years would result in a savings of $917 billion. Further cuts of $1.2 trillion and $1.5 trillion will be determined by the end of the year. These cuts would be imposed over a ten year span. Cuts between $1.2 and $1.5 trillion will be matched dollar for dollar, any cuts below that will be matched with a $1.2 trillion ceiling raise.
As it stands now, low income families will not be severely affected by the debt reductions. Exempt from cuts during this round is Food Stamps and Supplemental Security income, Social Security, Veteran Benefits, and veteran pensions. Medicare is not exempt but can only be cut up to 2%.
If a deadlock occurs and committee cannot find $1.2 trillion in cuts by the end of the year, across the board cuts will automatically kick in. A Balanced Budget Amendment voted on and passed and forwarded to the states ratification would also keep that from happening, but that is a pretty unlikely scenario.
Voting is set to begin today, Monday, August 1st.
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