It increasingly appears that federal lawmakers are prepared to take a short respite from the partisan posturing and bickering that has driven the debate about the debt ceiling and the federal deficit. On Sunday evening, the President and congressional leaders announced that they had struck a deal that would allow the United States Treasury to borrow the money required to avoid an August 2nd federal default and trigger what some economists have speculated would be a global economic crisis. The House of Representatives approved the deal on Monday by a 269-161 vote. Senate Majority Leader Reid (D-NV) plans to have the measure before the Senate today.
Details of the plan are still emerging and the ramifications for federal investments in scientific research are not known yet. Despite the jubilance of Democratic and Republican leaders, some policy analysts as well as the progressive and conservative wings of both political parties are increasingly skeptical about the merits of the agreement.
In brief, the final plan reportedly will provide for an immediate increase to the federal debt ceiling. According to White House documents, the plan would also:
- Immediately impose a 10-year discretionary spending cap generating nearly $1 trillion in deficit reduction, balanced between defense and non-defense spending.
- Provide the President with the authority to increase the debt limit by at least $2.1 trillion, eliminating the need for further increases until 2013.
- Establish a bipartisan committee process tasked with identifying an additional $1.5 trillion in deficit reduction, including from entitlements and tax reform. The committee is required to report legislation by 23 November 2011, which receives fast-track protections. Congress is required to vote on Committee recommendations by 23 December 2011.
- Create an enforcement mechanism established to force all parties - Republican and Democrat - to agree to balanced deficit reduction. If the committee fails, the enforcement mechanism will trigger spending reductions beginning in 2013 - split 50/50 between domestic and defense spending. Medicaid, Social Security and programs for the poor would be exempted from these cuts.
More analysis of the plan will be provided in the next Public Policy Report.
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