Obama, leaders reach agreement on debt deal to prevent default
"But in the end, reasonable people were able to agree on this: The United States could not take the chance of defaulting on our debt, risking a United States financial collapse and a world-wide depression."
Vice President Joe Biden, who played an important part in this weekend's negotiations, agreed. He tweeted, "Compromise makes a comeback."
Not everyone felt that way.
"Someone has to say no. I will," said Rep. Michele Bachmann, R-Minn., a contender for the 2012 Republican presidential nomination.
Across the weeks, Boehner emerged as Obama's principal Republican antagonist in a contentious new era of divided government, yet struggled to corral his own rank and file at times.
At the end, though, McConnell and Biden, who looked on as Obama announced the deal, provided a negotiating channel to get the deal completed, overcoming a last-minute standoff over the impact of spending cuts on the Pentagon budget.
The plan calls for spending cuts and increased borrowing authority for the Treasury in two stages.
In the first, passage of the legislation would trigger more than $900 billion in spending cuts over a decade as well as a $900 billion increase in the government's borrowing authority.
The spending cuts would come from hundreds of federal programs across the face of government — accounts that Obama said would be left with the lowest levels of spending as a percentage of the overall economy in more than a half-century.
The increased borrowing authority includes $400 billion that would take effect immediately, and $500 billion that would be permitted after Congress had a chance to block it.
In the second stage, a newly created joint committee of Congress would be charged with recommending $1.5 trillion in deficit reductions by the end of November that would be put to a vote in Congress by year's end. The cuts could come from benefit programs such as Medicare, Social Security and Medicaid as well as from an overhaul of the tax code.
The committee proposals could trigger a debt limit increase of as much as $1.5 trillion, if approved by Congress. But if they do not materialize, automatic spending cuts would be applied across government to trim spending by $1.2 trillion.
Social Security, Medicaid and veterans' benefits would be exempt from the automatic cuts, but payments to doctors, nursing homes and other Medicare providers could be trimmed, as could subsidies to insurance companies that offer an alternative to government-run Medicare.
The deal marked a classic compromise, a triumph of divided government that would let both Obama and Republicans claim they had achieved their objectives.
As the president demanded, the deal would allow the debt limit to rise by enough to tide the Treasury over until after the 2012 elections.
But Obama's request to extend the current payroll tax holiday beyond the end of 2011 would not be included, nor his call for extended unemployment benefits for victims of the recession.
Republicans would win spending cuts of slightly more than the increase in the debt limit, as they have demanded. Additionally, tax increases would be off limits unless recommended by the bipartisan committee, which is expected to include six Republicans and six Democrats. The conservative campaign to force Congress to approve a balanced-budget amendment to the Constitution would be jettisoned.
Congressional Democrats have long insisted that Medicare and Social Security benefits not be cut, a victory for them in the proposal under discussion. Yet they would have to absorb even deeper cuts in hundreds of federal programs than were included in legislation they had advanced in the final days before an agreement was reached.
Associated Press writers Ben Feller, Jim Abrams, Laurie Kellman and Andrew Taylor contributed to this story.
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