House and Senate Pass Debt Bill.
The Senate voted 74-26 to pass the bill following the House voting 269-161 last night. President Obama plans to quickly sign the legislation.
Bipartisan Two-Stage Debt $2.5 Trillion Deal Averts Default on U.S. Obligations But Paves the Way for Possible Entitlement Cuts and Revenue Increases
Following dueling House and Senate debt plans over the weekend and a vote delay Sunday on the "Reid Senate" plan, House, Senate, and White House principals agreed Sunday night on a compromised plan to raise the debt ceiling by August 2 with a two-stage deficit reduction plan. Negotiations over the weekend focused on the details of a bipartisan, bicameral committee and enforcement measures to assure further deficit reductions.
Keep in mind that details are sketchy and both congressional chambers must pass this compromised plan.
The Senate and the House are set to vote later today on a bipartisan deal to (1) increase the debt ceiling through 2012 that makes an immediate $900 billion "down payment" in deficit reduction with a discretionary cap on spending cuts over 10 years with no revenue increases and (2) puts in place a second-stage longer term process for an additional $1.5 trillion in deficit reduction through a bipartisan, bicameral "super commission" or, should the commission fail, through an automatic trigger mechanism that would enforce $1.2 trillion in cuts.
The president would be authorized to increase the debt limit by at least $2.1 trillion, eliminating the need for further increases until 2013.The "deal" not only averts a national default, but averts any immediate cuts to Medicaid, Medicare and Social Security.
Bipartisan Commission and Enforcement Measures
The newly created bipartisan, bicameral joint committee of to-be-named lawmakers would seek further deficit reduction measures of at least $1.5 trillion by November 23, with the goal of enacting the recommendations by December 23. With everything on the table, the committee could include recommendations from the Bowles-Simpson fiscal commission, the so-called "Gang of Six," and other plans.The new committee could, therefore, include cuts/reforms to entitlement programs (i.e., Medicaid) and also revenue (tax) increases.The committee's recommendations would receive fast track Congressional authority by preventing amendments or a filibuster.
Should the committee fail, the debt plan establishes a" trigger" mechanism that forces Congress to make across-the-board spending cuts, with half of the cuts from defense spending and the other half from non-security discretionary spending beginning in 2013. The enforcement mechanism protects Medicaid, Socials Security, and Medicare (beneficiaries, but not Medicare providers) from any cuts.