The debt ceiling would be raised by $2.1 trillion with spending cuts of $1 trillion over the course of ten years. The cuts will be enacted immediately.
$350 billion from the defense with another $1.5 million to be cut via a bipartisan committee by November 23, 2011
If there is no agreement on the more cuts then a “trigger” (enforcement mechanism) will cause reductions of $1.2 trillion at the start of 2013. These cuts will be a 50/50 split between domestic and defense spending.
Note: Trigger will not be in place until 2013 to avoid any chance at going back into a recession.
This proposed deal, which most likely will get through the House and Senate, will keep the U.S. credit rating at AAA with $2.4 trillion in savings over the next decade and the debt ceiling raise through the end of 2012. The proposed deal needs be signed by President Obama by 11:59 PM Tuesday, August 2nd to avoid default.
Two stage process of the agreement:
$917 billion in spending cuts along with a $900 billion increase in the debt ceiling.
Due to the urgency of the approaching August 2nd deadline the President has the authority to raise the debt ceiling by $400 billion, which would get us through September.
The other $500 billion of debt ceiling extension: Congress can vote but is subject to a Presidential veto.
As previously mentioned a bi-partisan committee of Congress would vouch for more reductions totaling $1.5 trillion or more by November. The Committee will be made up of 12 members, six from each chamber with and equal number of Democrats and Republicans.