It’s up to the House of Representatives to avoid a national calamity.
Congressional leaders and President Obama reached a deal last night to prevent the country from defaulting on its debt, possibly sparing millions of Americans from higher price tags on gasoline, mortgages and interest rates on their credit cards.
But “there are still some very important votes to be taken by members of Congress,” Obama cautioned last night in a TV address announcing the agreement on a deal with nearly $3 trillion in spending cuts.
“Is this the deal I would have preferred? No,” Obama admitted. “But this compromise does make a serious down payment on the deficit reduction we need.”
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He also vowed to keep the pressure on lawmakers to approve tax hikes opposed by the GOP, and entitlement reforms opposed by Democrats.
The Senate is expected to take up the plan today, with Democrats and Republicans meeting separately this morning to rally support for the bargain.
“This is an important moment for our country,” said Senate Minority Leader Mitch McConnell (R-Ky.)
“I think I can say with a high degree of confidence that there is now a framework . . . that will ensure significant cuts in Washington spending.”
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The tough hurdle is in on the other side of the Capitol, where House Speaker John Boehner (R-Ohio) and House Minority Leader Nancy Pelosi (D-Calif.) will have to get enough votes from both parties to pass it.
“This has been a long battle. We’ve fought valiantly — and, frankly, we’ve done it by listening to the American people,” Boehner told House Republicans in a conference call last night.
“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.
“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.”
But Boehner’s House is the unknown.
That includes 40 or so Tea Party members who have so far adamantly refused to approve any deal that includes the possibility of deep cuts to Pentagon spending — triggered automatically under the plan if there’s no agreement on future cuts.
Also in question are 60 other conservatives.
Then, there’s a cadre of about 80 House Democrats who so far have refused to approve any plan that includes the possibility of deep cuts to social-service programs like Social Security and Medicare. Those cuts also could be triggered in the future.
There are also about 50 wildcard members, spread over both parties, that could go either way.
The deal hammered out by McConnell and Biden would raise the $14.3 trillion debt limit in two phases: an immediate $900 billion increase, followed by a $1.5 trillion hike next year.
It also grants Obama temporary authority to hike the debt limit without Congress’ approval.
The plan calls for spending cuts of at least $2.7 trillion over 10 years, also executed in two steps.
First, the deal immediately institutes $1.2 trillion in cuts.
At least another $1.5 trillion in cuts are to be identified by a bipartisan committee by Thanksgiving.
If Congress fails to pass that panel’s recommended cuts by Dec. 23, it triggers $1.5 trillion in automatic cuts to such prized agencies and programs as the Pentagon and Medicare.
These “triggers” are a key element of the deal, and had been a main sticking point in negotiations for weeks.
It holds a hammer over the special committee as it considers hot-button issues, such as reforming the tax code, Social Security, Medicare and Medicaid.
Desperate to make the deal, Obama made his third major concession to Republicans in as many months.
This time, he surrendered his objection to a two-stage debt-limit increase, just as he previously gave up demands for added tax revenues and for an increase with no spending cuts.
The $2.7 trillion in cuts likely are big enough to calm financial markets, but they won’t necessarily stop a ruinous credit downgrade.
Meanwhile, Japan’s Nikkei average surged today, climbing back above 10,000 for the first time in three days. Hong Kong’s Hang Seng Index also was up.
THE PLAN
* A debt ceiling increase of $2.4 trillion: $900 billion now and $1.5 trillion next year
* Spending cuts of at least $2.7 trillion over 10 years: an immediate $1.2 trillion cut and another $1.5 trillion set by Thanksgiving
* That second round of cuts would be decided by a special bipartisan committee, with a Thanksgiving 2011 deadline to act.
* If both houses do not approve the committee’s recommendations by Dec. 23, it would trigger automatic spending cuts of $1.5 trillion affecting the Pentagon, Medicare and other prized programs.
WINNERS & LOSERS
Winners:
* Senate Majority Leader Mitch McConnell (R-Ky.): Swooped in at the critical last minutes and dragged President Obama back to the negotiating table to finish a deal.
* Vice President Joe Biden: Re-emerged as the elder statesman at the 11th hour with the framework of a deal, hammering out the final details.
Losers:
* President Obama: Elbowed out of final negotiations by McConnell and Biden, and had to make yet another major concession, giving up his demand for a one-time increase and settling for a two-stage hike.
* House Speaker John Boehner (R-Ohio): Was left out of the final negotiations after he struggled to get enough GOP support to get his own debt plan passed in the House.
* Senate Majority Leader Harry Reid (D-Nev.): Left out of the final deal-making, and was exposed as being out of the loop when he discounted any progress being made by McConnell and the White House.
A NAILBITER
* House members: 433 (with 2 vacancies)
* Votes needed for passage of the debt limit package: 217
HOUSE DEAL BREAKER
* About 100 GOP conservative and Tea Party members could nix the deal.
* About 80 liberal Democrats could say nay.
* About 50 wildcards among both parties could swing either way.
* That leaves roughly 203 of the 217 needed votes.