On July 31, House and Senate leadership and President Obama announced an agreement that would raise the federal debt limit by $2.4 trillion over the next 10 years, just days before an August 2 deadline to raise the federal debt ceiling.
The deal itself, the Budget Control Act of 2011, would include $900 billion in spending cuts accomplished through caps on appropriations from FY12 through FY21 and set in motion requirements to cut at least an additional $1.5 trillion. There are no provisions in the agreement to raise revenues, either through ending tax breaks for corporations or the wealthiest households. The proposal would reduce non-defense discretionary spending to the lowest level since the mid-1950s when Dwight Eisenhower was President, before most HUD programs existed.
The White House praised the deal in a July 31 statement, calling it “a victory for bipartisan compromise, for the economy and for the American people.”
The remaining $1.5 trillion additional savings would be would be identified by a Joint Select Committee on Deficit Reduction, which the bill would establish. This committee of 12, three from each party in each chamber, would be tasked by the bill to identify, by November 23, at least $1.5 trillion in additional savings over the same 10 year period.
If the deficit reduction committee is deadlocked or cannot gain approval of its savings plan by December 23, then across the board cuts would occur to both domestic and defense programs. A deadlock or lack of congressional agreement would not result in automatic increases in revenues alongside the automatic cuts. The committee is not to consider cuts or changes to Social Security or Medicaid, but changes to Medicare could be included. The committee may, but is not required to, include revenue raisers in its $1.5 trillion savings plan.
The Budget Control Act would also require the House and Senate to hold a vote on a balanced budget amendment to the Constitution by year’s end.
This bill is expected to be voted on by the Senate and then the House on August 1.
Link to the Budget Control Act of 2011 at: http://nlihc.org/doc/Budget_Control_Act_2011.pdf
Link to the White House’s July 31 statement at: http://nlihc.org/doc/WH_Bipartisan_Debt_Deal_7-31-11.pdf