Saturday, July 30, 2011


. Saturday, July 30, 2011

Looks like there's an emerging debt ceiling deal that will likely pass both houses. Here's the gist:

- Debt ceiling increase of up to $2.8 trillion

- Spending cuts of roughly $1 trillion

- Vote on the Balanced Budget Amendment

- Special committee to recommend cuts of $1.8 trillion (or whatever it takes to add up to the total of the debt ceiling increase)

- Committee must make recommendations before Thanksgiving recess

- If Congress does not approve those cuts by late December, automatic across-the-board cuts go into effect, including cuts to Defense and Medicare.

No new revenues, and the usual "not done deal yet" caveats apply. But assuming it passes this is a huge victory for Republicans. For everyone wondering why they were acting so crazy up until now... this is why they were acting so crazy up until now.

I hope the Fed responds with QE3.


Christopher Dittmeier said...

I've heard that "farm subsidies" are one of the expenditures that will get cut in the trigger. This process has become so convoluted, I'm not even sure whether it is an expenditure or revenue anymore.

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