Congress Must Trim Deficit to Avoid Broader Cuts

John Boehner

The deal, as described by lawmakers and White House officials, would initially save more than $900 billion over 10 years by imposing annual limits on spending for most federal agencies and programs.

The Congressional Budget Office has not analyzed the proposal, so the numbers are not firm. But the White House said the agreement would “cut $350 billion from the defense budget over 10 years.” The Pentagon will have leeway to decide where the cuts would be made.

Under the agreement, the president could increase the federal debt limit by at least $2.1 trillion, which is enough to meet the government’s expected borrowing needs until early 2013.

In addition, the bill would create a 12-member bipartisan committee, with equal numbers of Democrats and Republicans from the House and the Senate, to recommend ways of reducing future deficits by another $1.5 trillion over 10 years — above and beyond the amounts saved as a result of the annual caps on appropriations.

The panel’s recommendations could include changes in entitlement programs and tax laws. President Obama vowed on Sunday to press for the inclusion of additional revenues, which many Republicans have vowed to resist.

The special committee would have to report legislation by Nov. 23. The deal establishes expedited procedures intended to ensure an up-or-down vote on the legislation, without amendments, by Dec. 23.

If the committee does not reach agreement or if Congress fails to adopt its recommendations, the government would automatically cut spending. The cuts would be split evenly between domestic and defense spending. In 2012 and 2013, the “defense spending” category would be broadly defined to include homeland security and other programs related to national security.

The White House said the enforcement mechanism “protects Social Security, Medicare beneficiaries, and low-income programs from any cuts.” Medicare cuts would hit health care providers, like hospitals and nursing homes, but would not directly affect beneficiaries, the White House said.

However, hospitals and other providers say the cuts in their Medicare payments would force cutbacks in services to Medicare patients and others.

In a summary of the agreement for House Republicans, the speaker, John A. Boehner, said: “Total reductions would be equally split between defense and nondefense programs. Across-the-board cuts would also apply to Medicare. Other programs, including Social Security, Medicaid, veterans, and civil and military pay, would be exempt.”

The legislation, like a bill passed by the House last week, would provide for an increase in the debt limit in two steps.

The second increase, for $1.5 trillion, could take place only if Congress approves recommendations cutting the deficit by a larger amount — or if Congress approves a constitutional amendment to require a balanced budget and sends it to the states for ratification.

It takes a two-thirds majority in both houses to propose a constitutional amendment.

Under the original House bill, the second installment of the debt limit increase would have been contingent on Congress approving both the balanced budget amendment and the $1.5 trillion deficit-reduction measure.

The White House said this arrangement would “provide a strong incentive for both sides to come to the table.”

“If the fiscal committee took no action, the deal would automatically add nearly $500 billion in defense cuts on top of cuts already made,” the White House said. Likewise, it said, Democrats would have an incentive to accept the deficit-reduction package to avoid across-the-board cuts in education, transportation and other domestic programs.

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