Category Archives: Law

by Jeanne Sahadi CNN Money

The debt ceiling deal passed by the House on Monday and by the Senate Tuesday will keep the country out of default and reduce deficits by at least $2.1 trillion over a decade.
Whether the deal might also avert a first-ever credit downgrade for the United States is not clear, since ratings agency Standard & Poor’s indicated it was looking for a credible, bipartisan plan that had at least $4 trillion of debt reduction.
The plan includes no tax or entitlement reform measures up front, although theoretically it leaves the door open to both.
A debt ceiling increase of between $2.1 trillion and $2.4 trillion: The framework will raise the debt ceiling immediately by $400 billion, then by another $500 billion after September.
After deep cuts are enacted by the end of the year, it will be increased by another $1.2 trillion to $1.5 trillion.
All told, the increases should cover the Treasury’s borrowing needs until 2013.

At least $2.1 trillion in spending cuts: The framework will immediately cap domestic and defense spending, resulting in cuts of $917 billion over 10 years.
The framework then calls for more deficit reduction — between $1.2 trillion and $1.5 trillion worth — to be determined by the end of this year and imposed over 10 years.
Bipartisan debt-reduction committee: That second round of deficit reduction would be proposed by a special bipartisan joint committee of Congress. The committee has until Thanksgiving to come up with its proposals and those proposals would be guaranteed by an up-or-down vote without amendment by Dec. 23.
If the committee proposes and the Congress approves between $1.2 trillion and $1.5 trillion in cuts, the debt ceiling will be increased dollar for dollar.
If the committee deadlocks or comes up with less than $1.2 trillion in cuts, or if Congress votes down the committee’s proposals, the debt ceiling will be raised by $1.2 trillion.
While it appears the committee will be free to consider entitlement and tax reform — and dare we say it, tax hikes — practically speaking it’s more likely members would hit an impasse over these measures just as they have, oh, every other day this year.

Read the legislation – Full text