The details of a debt limit deal agreed to by congressional leaders and the White House became public Sunday evening. According to John Boehner's office, the first $900 billion debt limit increase is tied to $917 billion in discretionary spending cuts over 10 years.
The second debt limit hike of $1.5 trillion will occur if either (a) a balanced budget amendment is passed by Congress and sent to the states for ratification or (b) Congress passes a $1.5 trillion deficit reduction package recommended by a special committee.*
If Congress neither passes a balanced budget nor the special committee's cuts, across the board spending cuts would occur. "Total reductions would be equally split between defense and non-defense programs. Across-the-board cuts would also apply to Medicare," according to Boehner's office. "Other programs, including Social Security, Medicaid, veterans, and civil & military pay, would be exempt."
Here are excerpts from John Boehner's telephone call with the House GOP conference tonight:
“The press has been filled with reports all day about an agreement. There’s no agreement until we’ve talked to you. There is a framework in place that would cut spending by a larger amount than we raise the debt limit, and cap future spending to limit the growth of government. It would do so without any job-killing tax hikes. And it would also guarantee the American people the vote they have been denied in both chambers on a balanced budget amendment, while creating, I think, some new incentives for past opponents of a BBA to support it.”
“My hope would be to file it and have it on the floor as soon as possible. I realize that’s not ideal, and I apologize for it. But after I go through it, you’ll realize it’s pretty much the framework we’ve been operating in.”
“Since Day One of this Congress, we’ve gone toe-to-toe with the Obama Administration and the Democrat-controlled Senate on behalf of our people we were sent here to represent.”
“Remember how this all started: the White House demanded a “clean” debt limit hike with no spending cuts and reforms attached. We stuck together, and frankly made them give up on that.”
“Then they shifted to demanding a “balanced” approach – equal parts spending cuts and tax hikes. With this framework, they’ve given up on that, too.”
“I’m gonna tell you, this has been a long battle – we’ve fought valiantly – and frankly we’ve done it by listening to the American people. And as a result, our framework is now on the table that will end this crisis in a manner that meets our principles of smaller government.”
“Now listen, this isn’t the greatest deal in the world. But it shows how much we’ve changed the terms of the debate in this town.”
“There is nothing in this framework that violates our principles. It’s all spending cuts. The White House bid to raise taxes has been shut down. And as I vowed back in May – when everyone thought I was crazy for saying it – every dollar of debt limit increase will be matched by more than a dollar of spending cuts. And in doing this, we’ve stopping a job-killing national default that none of us wanted.”
And here are President Obama's remarks from the White House:
THE PRESIDENT: Good evening. There are still some very important votes to be taken by members of Congress, 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.
The first part of this agreement will cut about $1 trillion in spending over the next 10 years -- cuts that both parties had agreed to early on in this process. The result would be the lowest level of annual domestic spending since Dwight Eisenhower was President -- but at a level that still allows us to make job-creating investments in things like education and research. We also made sure that these cuts wouldn’t happen so abruptly that they’d be a drag on a fragile economy.
Now, I've said from the beginning that the ultimate solution to our deficit problem must be balanced. Despite what some Republicans have argued, I believe that we have to ask the wealthiest Americans and biggest corporations to pay their fair share by giving up tax breaks and special deductions. Despite what some in my own party have argued, I believe that we need to make some modest adjustments to programs like Medicare to ensure that they’re still around for future generations.
That's why the second part of this agreement is so important. It establishes a bipartisan committee of Congress to report back by November with a proposal to further reduce the deficit, which will then be put before the entire Congress for an up or down vote. In this stage, everything will be on the table. To hold us all accountable for making these reforms, tough cuts that both parties would find objectionable would automatically go into effect if we don’t act. And over the next few months, I’ll continue to make a detailed case to these lawmakers about why I believe a balanced approach is necessary to finish the job.
Now, is this the deal I would have preferred? No. I believe that we could have made the tough choices required -- on entitlement reform and tax reform -- right now, rather than through a special congressional committee process. But this compromise does make a serious down payment on the deficit reduction we need, and gives each party a strong incentive to get a balanced plan done before the end of the year.
Most importantly, it will allow us to avoid default and end the crisis that Washington imposed on the rest of America. It ensures also that we will not face this same kind of crisis again in six months, or eight months, or 12 months. And it will begin to lift the cloud of debt and the cloud of uncertainty that hangs over our economy.
Now, this process has been messy; it’s taken far too long. I've been concerned about the impact that it has had on business confidence and consumer confidence and the economy as a whole over the last month. Nevertheless, ultimately, the leaders of both parties have found their way toward compromise. And I want to thank them for that.
Most of all, I want to thank the American people. It’s been your voices -- your letters, your emails, your tweets, your phone calls -- that have compelled Washington to act in the final days. And the American people's voice is a very, very powerful thing.
We’re not done yet. 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. It will allow us to avoid default. It will allow us to pay our bills. It will allow us to start reducing our deficit in a responsible way. And it will allow us to turn to the very important business of doing everything we can to create jobs, boost wages, and grow this economy faster than it's currently growing.
That’s what the American people sent us here to do, and that’s what we should be devoting all of our time to accomplishing in the months ahead.
Thank you very much, everybody.
*Boehner's office claims it would be virtually impossible for the committee to recommend tax increases because the committee is working off the baseline of "current law" rather than "current policy." That means that for purposes of scoring deficit reduction, the committee assumes the expiration of all Bush tax cuts. To achieve any deficit reduction through tax hikes, the committee would have to raise taxes by more than $4 trillion, which is how much revenue the expiration of the Bush tax cuts would produce over 10 years.