American Sauce: Debt deal cheat sheet
August 2nd, 2011
08:00 AM ET
3 years ago

American Sauce: Debt deal cheat sheet


Capitol Hill (CNN) - Confused or annoyed by the debt deal? We have a podcast and cheat sheet to simplify your life and ease your pain.

Listen to this week's American Sauce here. We lay out the debt deal, look at Congress' addiction to crises and go over the deadline lawmakers missed: to keep the Federal Aviation Administration funded and running.

Comment below. Look here for our Debt Deal Cheat Sheet.

Basics

Read it: Here.

Length: 74 pages

Title: Budget Control Act of 2011

Raising the Debt Ceiling

The bill raises the debt ceiling by a minimum of $2.1 Trillion and a maximum of $2.4 Trillion.

Thus, by the end of this year, the limit on the U.S. national debt would be somewhere between $16.4 Trillion – $16.7 Trillion total.

Both parties estimate that will give the government the borrowing power it needs through 2012.

Under this deal, the debt is increased in two phases. (See below)

Phase One

This bill would cut $917 billion in spending over ten years. (See "initial spending cuts" below.)

And it would raise the debt ceiling by $900 billion.

Lawmakers involved believe that gives the U.S. the borrowing power it needs through early 2012.

Phase Two

The debt limit could increase $1.2 – $1.5 trillion in this phase, attached to deficit cuts of the same magnitude.

The debt deal sets up a sort of triple trigger or three different ways that Congress could trigger the next debt increase.

1. Trigger One: BBA – The debt ceiling would increase another $1.5 trillion if Congress passes a balanced budget amendment to the Constitution. That requires 2/3 vote of each chamber.

2. Trigger Two: Supercommittee – The debt ceiling would increase up to $1.5 trillion if Congress passes broad deficit reform measures as recommended by a new joint committee. The ceiling would increase only by the amount of deficit cuts passed by the committee and Congress. Thus if the committee passes $1.3 trillion in deficit cuts, the president could ask for only a $1.3 trillion increase in the debt ceiling. (See "Joint Committee" below)

3. Trigger Three: Automatic Cuts – If neither of the above options happens, the lack of action triggers automatic across-the-board cuts in goverment. Those cuts would be up to $1.2 trillion and would trigger an increase in the debt ceiling of the same amount. Cuts would be up to 2% for Medicare, but the bill dictates they should not affect beneficiaries.


Initial Spending Cuts

The $917 billion in cuts in phase one come as spending caps over the next ten years.

The bill does not delineate which agencies would take what amounts of cuts. Instead it would limit appropriators in future years to certain spending caps. Where the cuts hit would be up to future committees and Congresses.

The caps do not cut total government spending year to year, but instead shrink how much that spending grows. Put another way, under this plan discretionary government spending would still increase year to year, but would increase by significantly less than under current policy.

These are cuts in future spending.

Joint Committee

Who: 12 members of Congress. 6 Republicans. 6 Democrats. Party leaders in each chamber chose.

When: Committee has until Thanksgiving to come up with a plan to cut up to $1.5 trillion from future deficits. Congress must vote by Dec. 23.

The Vote: The reform package would require a simple majority, not the usual 60 vote, to move through the Senate.

What: The committee can recommend any reforms in the federal budget. It's goal is to find $1.5 trillion in deficit cuts.

Want more? Listen to our podcast here.

You can also listen to American Sauce on iTunes, Stitcher or subscribe to the podcast via RSS.

–CNN's Dan Szematowicz and Emma Lacey-Bordeaux contributed to American Sauce.


Filed under: American Sauce • Debt • Economy
soundoff (11 Responses)
  1. TennMann

    Please don't forget a constitution amendment requires ratification by the states along with a 2/3 congress vote.
    Not that you will ever get a 2/3 vote on this issue from our congress.

    August 2, 2011 09:07 am at 9:07 am |
  2. Don

    So six weeks of brinkmanship and posturing results in business as usual in DC. We are doomed as a country...

    August 2, 2011 09:20 am at 9:20 am |
  3. GrogInOhio

    Note this summary doesn't mention that not one cent is required in taxes from the wealthiest Americans. The cuts effect the most vulnerable while the wealthiest keep getting wealthier. It is unlikely to change in said Supper Committee.

    August 2, 2011 09:24 am at 9:24 am |
  4. Sank

    Without the balanced budget being passed this budget answers no immediate needs therefore worthless. What about the funding of illegals. The is no mentioning of cutting spending in their direction. Obama stills intends to take care of them.Come one come all even if you do it illegally. It seems the people to be punished with your deficit cuts are the Americans who have withehld this government together for years.

    August 2, 2011 09:27 am at 9:27 am |
  5. GI Joe

    The constitution that the republicans love so much - they want to change. JUST to extract more from the middle class and working poor.

    August 2, 2011 09:29 am at 9:29 am |
  6. Sniffit

    $10 says the GOPers on the Joint Committee demand that silly BBA nonsense all over again AND refuse to consider revenues whatsoever. I believe their excuse will be "but the Bush tax cuts are supposed to expire"...nevermind that they're going to demagogue their expiration as "take hikes" all over the place for Nov 2012. This will, of course, be followed by kabuki theatrics and one or two of the GOP members throwing their hands up in feigned disgust and then walking away from the negotiations spouting claims that the Dems are being unreasonable because they insist on revenues and that the Dems won't produce a proposed plan, both of which claims are pretty much mutually exclusive (after all...if there are no proposals, then how can you claim that the Dems are insisting on something?).

    The $500B in defense cuts are better than the Medicare provider cuts are bad though, so they can just eat them for all we should care. Let them explain to their base how they managed to screw up by playing ideological entrenchment games and got a few defense contractor plants closed for their recalcitrance and refusal to be reasonable, rational parties at the table. First up though, the GOP is already gearing up their messaging for threatening another government shutdown in Sept/Oct when another continuing resolution will have to be passed. Pay close attention to their rhetoric over the recess...it will no doubt be very focused on promising even more cuts in the middle of a recession by holding the gov't hostage again.

    August 2, 2011 09:42 am at 9:42 am |
  7. 100% ETH

    Wars, Recessions, Domestic Violence, deterrence the space station students, Muslim Brotherhood got accesses in American Politics and Sophisticated Chemical Labs, Americans forced to live with Muslim Extremists who keep building Mosques in every neighbourhoods to damaged and devalued the founding Fathers of Christians images,......debit ceiling.

    You know, the jobs in America can never be accomplished, but we always do our best. The problems are keep growing along with the Societies, even though it is better than before.

    August 2, 2011 09:42 am at 9:42 am |
  8. MONEY WATCHER

    Can you believe our government can not cut anything? This is a promise to spend more in the future! Come on CNN do some Journalism here. And spell it out for the middle class who can not possible understand most of this rhetoric.
    I am all for growing our way out of this but how about showing some good faith and cutting back on anything NOW!

    August 2, 2011 09:42 am at 9:42 am |
  9. Sniffit

    "Who: 12 members of Congress. 6 Republicans. 6 Democrats. Party leaders in each chamber chose."

    Also pay close attention to who gets picked to negotiate. If the GOP picks even one Teatroll, it's all a sham and a farce and they have no intention of the Committee finding its way to agreement on anything, let alone when to take a bathroom break. Of course, the Teatrolls will be demanding a seat at the table. Have fun with that catch-22, GOPers.

    August 2, 2011 09:51 am at 9:51 am |
  10. Grouchybear

    Where is the "Cheat Sheet" – your link above goes to the sauce audio....

    August 2, 2011 09:53 am at 9:53 am |
  11. Sniffit

    "I am all for growing our way out of this but how about showing some good faith and cutting back on anything NOW!"

    The vast majority of the cuts were scheduled for 2014 because the vast majority of economic experts quite accurately reminded everyone that cutting government spending in the middle of the recovery from a massive recession would cause a disasterous contraction of the economy and throw us into another recession. Whether you like it or not, whether it fits your version of "common sense" or "folksy wisdom" or not, increased government spending during a recession is, in FACT, a "necessary evil" that helps stabilize the economy and prevent it from shrinking out of control. Accept it or not, reality doesn't care what you think...it just keeps on keepin' on.

    August 2, 2011 09:56 am at 9:56 am |