Debt ceiling countdown: Agreement to come “very soon”

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WASHINGTON (BDCi) – On various Sunday morning shows, there was widespread agreement from both Democrats and Republicans that a deal to raise the debt ceiling and cut spending is forthcoming before the August 2nd deadline.
White House Senior Advisor David Plouffe went on NBC’s Meet the Press Sunday and said that the deal in its current form would raise the debt ceiling in exchange for a total of $2.8 trillion in spending cuts.
The cost reductions would come in two stages. The first stage would see $1 trillion of cuts that were broadly agreed to in these negotiations between the two parties.
The second batch of reductions -$1.8 trillion – would be recommended by a special committee to be named later, and if that committee’s suggestions were not agreed to, then an automatic reduction mechanism would be put in place.
This accord would carry the country’s public economy through the 2012 election, something the Democrats wanted. It also is void of new taxes, a show stopper for Republican lawmakers.
The U.S. must raise its debt ceiling by August 2nd (Tuesday, midnight) or else it will not be able to borrow to pay all of its bills. The Treasury department will have to report what bills will be paid, and which ones won’t be, which could put us in default.
Mitch McConnell, Senate minority leader, speaking on CNN’s “State of the Union,” said he hoped to be able to recommend an agreement “very soon” to Republican senators. Asked if a deal would emerge on Sunday, he said, “Soon.”
A vote is scheduled at 1p.m. E.D.T. on the senate floor, a calculated move by Senate Majority Leader Harry Reid (D), so that the plan is firmed up legally before the opening of the Asian stock markets Monday.
“We have to get this solved. Today is obviously a critical day. We have to give confidence that there is a pathway” to reduce the deficit, Plouffe said.

By Don Weinstein
Source: Reuters
31 July 2011
7:44a.m. P.D.T.

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