After a tense weekend of bargaining, President Barack Obama and congressional leaders announced the agreement Sunday night, providing an instant boost to Asian financial markets and a huge dose of relief to an administration and Congress frazzled by months of partisan warfare and the chance that a default could send the still-fragile economy into recession.
This morning, top Obama aide David Plouffe said the deal was worthy of passage in both the House and Senate, even if no one got all they wanted and despite the protracted political battle that forced a jittery nation to endure a “three-ring circus” in Washington.
Relief around the world was indisputable, with Asian shares today enjoying one of the best sessions in weeks. The advance continued in Europe, and Wall Street was set for a solid opening — both the Dow futures and the broader S&P 500 futures were 1.2 percent higher.
The Senate seems likely to vote first on the measure while House GOP leaders work to assemble support for it. Democratic votes are certain to be needed to pass the measure in the Republican-dominated House, just as Republicans will be needed to clear the measure through the Democratic Senate. Liberal Democrats were already carping that Obama had given away too much to GOP leaders.
“Now, is this the deal I would have preferred? No,” Obama said. “But this compromise does make a serious down payment on the deficit reduction we need, and gives each party a strong incentive to get a balanced plan done before the end of the year.”
The still-unreleased legislation would slice more than $2 trillion from federal spending over a decade and permit the nation’s $14.3 trillion borrowing cap to rise by up to $2.4 trillion, enough to keep the government afloat through the 2012 elections — a key objective for Obama, whose poll numbers have sagged as the summertime crisis dragged on.
House Speaker John Boehner, R-Ohio, telephoned Obama at mid-evening to say the agreement had been struck, then immediately began pitching the deal to his fractious rank and file.
“It isn’t the greatest deal in the world, but it shows how much we’ve changed the terms of the debate in this town,” he said on a conference call, according to GOP officials. He added the agreement was “all spending cuts. The White House bid to raise taxes has been shut down.”
House Democratic Leader Nancy Pelosi, D-Calif., was publicly noncommittal. “I look forward to reviewing the legislation with my caucus to see what level of support we can provide,” Pelosi said in a written statement. But Democratic officials said she was unlikely to do anything to try to scuttle the package.
Passage seemed likely if not wholly assured. Support from Majority Leader Harry Reid, D-Nev., and Minority Leader Mitch McConnell, R-Ky., should guarantee Senate approval, but the House could prove more difficult because of defections from left and right alike.
“This deal trades people’s livelihoods for the votes of a few unappeasable right-wing radicals, and I will not support it,” said Rep. Raul Grijalva, D-Ariz.
Tea party favorite and presidential candidate Michele Bachmann, R-Minn., countered that the deal “spends too much and doesn’t cut enough. ... Someone has to say no. I will.”
The government presently borrows more than 40 cents of every dollar it spends, and without an infusion of borrowing authority, the government would face an unprecedented default on U.S. loans and obligations — like $23 billion worth of Social Security pension payments to retirees due Aug. 3.
The increased borrowing authority includes $400 billion that would take effect immediately and $500 billion that Obama could order unless specifically denied by Congress. That $900 billion increase in the debt cap would be matched by savings produced over the coming decade by capping spending on day-to-day agency budgets passed by Congress each year.