Senate Majority Leader Harry Reid, D-Nev., said Sunday that both parties may be close to an agreement on raising the debt limit, but that they weren't quite there yet.
“The framework of this agreement is based on some new ideas and some old ideas,” Reid said on the Senate floor moments ago. “After speaking with Republican Leader Mitch McConnell this morning, we are cautiously optimistic. There are a number of issues yet to be resolved. We must understand that. There’s no agreement until an agreement has been made. We’re optimistic that one can be reached, but we’re not there yet. And optimism in days passed has really been stomped on at times.”
Reid said that Democrats were insisting that the deal must hike the debt ceiling over the longer-term, which would mean somewhere in the $2.4 trillion neighborhood. He also said both sides had agreed to establish a joint Congressional committee to find future deficit savings. One holdup has been on what trigger would kick in if the comittee's recomendations are not enacted.
According to ABC, here's how the deal is shaping out:
- A debt ceiling increase of up to $2.1 to $2.4 trillion (depending on the size of the spending cuts agreed to in the final deal).
- They have now agreed to spending cuts of roughly $1.2 trillion over 10 years.
- The formation of a special Congressional committee to recommend further deficit reduction of up to $1.6 trillion (whatever it takes to add up to the total of the debt ceiling increase). This deficit reduction could take the form of spending cuts, tax increases or both.
- The special committee must make recommendations by late November (before Congress' Thanksgiving recess).
- If Congress does not approve those cuts by December 23, automatic across-the-board cuts go into effect, including cuts to Defense and Medicare. This “trigger” is designed to force action on the deficit reduction committee's recommendations by making the alternative painful to both Democrats and Republicans.
- A vote, in both the House and Senate, on a balanced budget amendment.
Any deal would have to pass both chambers of Congress, which would mean that House Speaker John Boehner, R-Ohio will need Democratic votes to make up for any GOP defections. Liberals are already describing the deal as a major capitulation by Obama, so most likely he'll need more centrist Democrats.