US President Obama announces deal reached to avert government default

Monday, August 1, 2011

United States President Barack Obama announced Sunday night that an agreement between Republican and Democratic leaders has been reached that, if passed by Congress, will allow the government to raise its debt limit before it begins to default on its debt on Tuesday.

The deal has yet to be approved, with a vote by lawmakers in Congress not likely until Monday at the earliest. Some lawmakers from both the Democratic and Republican parties have previously said that they will not vote for the agreement in question.

According to Obama, the deal, agreed upon by leaders of both the House of Representatives and the Senate, will lead to a total of a trillion dollars in spending cuts over the next ten years, as well as the creation of a Congressional committee tasked with coming up with a proposal by November to further reduce the government's debt.

Obama said that "the leaders of both parties in both chambers have reached an agreement that will reduce the deficit and avoid default, a default that would have had a devastating effect on our economy."

Senate Democratic leader Harry Reid and Senate Republican leader Mitch McConnell expressed optimism that Congress will pass the compromise deal. The Senate vote is due on Tuesday.

John Boehner, leader of the Republicans in the House, said that while "[t]his isn't the greatest deal in the world [...] it shows how much we've changed the terms of the debate in this town." He also said that he plans to call a vote on the deal "as soon as possible."

How much support the proposal has in the house is unclear. Democratic leader of the House Nancy Pelosi stated some Democratic members are resistant and are not likely to vote for the proposal.

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This story has updates

See Bill passed to raise US debt limit, August 3, 2011

Sources

Ewen MacAskill, Alex Hawkes. "Debt deal agreed but may not save US AAA credit rating" — guardian.co.uk, August 1, 2011
"Obama announces US deficit deal between party leaders" — BBC News Online, July 31, 2011
"President Obama: Deal reached on debt crisis" — CBS News, July 31, 2011

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