President Obama and Congress reached a deal on raising the debt ceiling today, averting a potential debt default just hours ahead of midnight deadline.
The framework for the deal, which was announced on Sunday by Congressional leaders, raises the debt ceiling in two stages - an initial $1 trillion now to stave off the threat of immediate default, and a second, $1.4 trillion to be proposed by a newly created congressional committee that would have to agree upon cuts.
The drama dragged on since early July, with agreement almost reached several times, only to fall apart at the last minute. Two weeks ago, the New York Times reported that a deal was close—only to have that flatly denied by White House Press Secretary Jay Carney later in the day.
In January the Senate convened the so-called "Gang of Six"—three Democratic senators and three Republican senators—to tackle the issue. In April it was announced that they near consensus on a debt-reduction plan, but that progress was imperiled when a month later, Senator Tom Coburn (R-Ok) abruptly withdrew from the talks. The other five senators,Saxby Chambliss (R-Ga), Michael D. Crapo (R-Id), Kent Conrad (D-ND), Mark Warner (D-Va), and chairman of the Senate Budget Committee Richard J. Durbin (D-Il) continued to meet.
Boehner put forward his own plan, calling for $3 trillion in cuts. His plan, which would accomplish the cuts in two stages, also called for another vote on the debt to take place before the end of 2012. His proposal passed the house on Friday night, but was immediately dismissed in the Senate. The House held a symbolic vote on Senate Majority Leader Harry Reid's plan on Saturday, where it failed to pass a two-thirds majority vote.
After desperate talks between Congress and the White House on Sunday, the House passed a Monday night, included GOP demand that any increase in the nation's debt limit be offset by cuts in spending. The president wanted any measure to include an increase in the debt limit significant enough to keep the government from revisiting the issue until 2013, after the next presidential election.
The measure would provide an immediate $400 billion increase in the $14.3 trillion U.S. borrowing cap, with $500 billion more assured this fall. That $900 billion would be matched by cuts to agency budgets over the next 10 years.
-with reporting by the Associated Press