Last-Minute Debt Ceiling Deal Announced on Sunday Night

Congressional leaders and President Obama announced on Sunday night that they’ve cut a deal to avert a historic U.S. default, saying they have assembled a framework that cuts some spending immediately and uses a “super Congress” to slash more in the future.

Just two days before a deadline to lift the so-called debt ceiling, the White House and congressional leaders said the compromise would cut about $2.5 trillion from the deficit over the next 10 years but allow Barack Obama’s administration to carry on borrowing money until 2013.

With Republican and Democratic leaders in agreement, the Senate will vote on the proposed agreement on Monday. House of Representatives Speaker John Boehner said he would bring it to a vote in that chamber as soon as possible.

The first phase of the two-stage plan calls for $1 trillion in spending cuts over the next decade. The next $1.5 trillion in savings must be found by a special congressional committee by the end of December.

The rationale for picking such favored programs as the Pentagon for Republicans and Medicare for Democrats, respectively, was to provide a strong incentive for the new committee to avoid a deadlock and deliver a deficit-reduction plan that can clear Congress.

“There are still some very important votes to be taken by members of Congress,” Mr Obama said at the White House on Sunday evening.

“But I want to announce that the leaders of both parties in both chambers have reached an agreement that will reduce the deficit and avoid default – a default that would have had a devastating effect on our economy.”

“I want to urge members of both parties to do the right thing and support this deal with your votes over the next few days,” he added.

Even as the president was speaking from the White House on Sunday night, Speaker John Boehner held a conference call with fellow House Republicans, trying to sell them on the proposal he had signed off on only minutes before.

Just before Obama spoke on television, the two Senate leaders, Harry Reid and Mitch McConnell, took the floor to endorse the pact as well.

Not everyone was pleased with the announced deal. “It may be the best we can do,” said Sen. Jeff Sessions of Alabama, the senior Republican on the Budget Committee. “But I do not think it’s enough.”

The Congressional Black Caucus called an “emergency meeting” Monday to discuss the proposal. The group’s chairman, Rep. Emanuel Cleaver, D-Mo., called it “a sugarcoated Satan sandwich.”

“This deal trades peoples’ livelihoods for the votes of a few unappeasable right-wing radicals, and I will not support it,” said Rep. Raul Grijalva, a Democrat from Arizona.

Markets reacted favorably to the announcement. Asian markets jumped on news of the deal. The Nikkei was up 1.7 percent in early trading; the dollar rose about 1.4 percent against the Japanese yen. [via The Telegraph, Huffpost and The Seattle Times]

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