Washington, Aug 1 (IANS) Democratic and Republican Congressional leaders scrambled Monday to sell an eleventh hour deal with President Barack Obama to raise the $14.3 trillion federal debt limit to avoid a catastrophic US government default.
The proposed deal reached Sunday night – just two days before the government runs out of cash Aug 2 – to raise the debt limit in two stages by as much as $2.4 trillion, is likely to come up before both chambers of Congress later Monday if leaders are able to garner enough support for the measure.
CNN cited a Senate Democratic leadership aide to say that the Senate planned to vote first Monday afternoon on the deal struck after weeks of bipartisan negotiations, and if the measure passes an expected Republican filibuster attempt, the house could vote on it Monday night.
‘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,’ Obama said in televised remarks late Sunday night.
‘The ultimate solution to our deficit problem must be balanced,’ Obama said. ‘That’s why the second part of this agreement is so important,’ he added, referring to the proposal to set up a bipartisan committee of both chambers of Congress to recommend additional deficit reduction steps.
They could call for tax reform to raise revenues, or propose cuts to popular entitlement programmes such as Medicare and Social Security. The White House said in its fact sheet that this group would look to recoup an additional $1.5 trillion through budget cuts or revenue hikes.
If the debt ceiling is not raised by Tuesday, Americans could face rising interest rates and the value of the US dollar may drop compared to other currencies. The federal government too will not be able to pay all its bills next month without an increase in the debt limit.
If approved, the plan agreed upon by the White House and congressional leaders would, as a first step, include about $1 trillion in spending cuts spread out over 10 years while raising the debt ceiling by the same amount. These cuts would be ‘balanced between defence and non-defence spending’, according to a White House fact sheet.
The agreement also requires both chambers of Congress to vote on adding a balanced budget amendment to the US Constitution.
(Arun Kumar can be contacted at arun.kumar@ians.in)
