Deal Very Close. Be Very Afraid.

by Jonathan Cohn | July 31, 2011

A headline now atop the New York Times webpage says "Amid New Talks, Some Optimism on Debt Crisis." I assume they are talking about people who think about the world differently than I do, because optimistic is pretty much the opposite of I am feeling this Sunday morning.

For those of you just waking up to the news, several media outlets are reporting that the White House and Republican leaders are close to a deficit reduction deal, pending final agreement on details and approval from lawmakers in both parties.

Jon Karl of ABC News first reported the framework. The White House pushed back against that report, saying it was not accurate, and subsequent updates (including by Karl himself) revealed new information. But it appears, based in part on what sources are telling TNR, that the deal will be something like the following, per Karl's most recent dispatch:

- 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.

Again, it's not clear how final this is. Huffington Post's Sam Stein and Elise Foley report that progressives and some congressional Democrats are seriously unhappy with the deal, particularly the terms of the trigger.

Brian Beutler, of TPM Media, notes that Charles Schumer is insisting upon a trigger that Republicans would find threatening. But Schumer seems to think including defense cuts would do the trick -- and I'm skeptical of that. Tea Party Republicans, in particular, seem willing to cut defense these days.

This is a developing story, obviously. So stay tuned. 

Source URL: http://www.newrepublic.com//blog/jonathan-cohn/92975/debt-ceiling-deal-trigger-medicare-defense-obama