US debt compromise
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Added on August 2, 2011 at 20:54 Riga tme
The debt deal passed the U.S. Senate 74:26.

Added on August 2, 2011 at 13:58 Riga time
Details regarding the debt deal:

In the House, 174 Republicans and 95 Democrats voted Yes, 66 Republicans and 95 Democrats voted No.

Here the 74-page full text of the debt deal called Budget Control Act Amendment.

Added on August 2, 2011 at 03:16 Riga time
The US House of Representatives passed the 74-page debt deal bill with 269 to 161 votes. Spending shall be cut and the debt ceiling raised.

Added on August 1, 2011 at 13:17 Riga time
Here the full text of Barack Obama's remarks on the possible US debt deal, given on July 31, 2011:

“Good evening.  There are still some very important votes to be taken by members of Congress, but I want to announce 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.

The first part of this agreement will cut about $1 trillion in spending over the next 10 years -- cuts that both parties had agreed to early on in this process.  The result would be the lowest level of annual domestic spending since Dwight Eisenhower was President -- but at a level that still allows us to make job-creating investments in things like education and research.  We also made sure that these cuts wouldn’t happen so abruptly that they’d be a drag on a fragile economy.

Now, I've said from the beginning that the ultimate solution to our deficit problem must be balanced.  Despite what some Republicans have argued, I believe that we have to ask the wealthiest Americans and biggest corporations to pay their fair share by giving up tax breaks and special deductions.  Despite what some in my own party have argued, I believe that we need to make some modest adjustments to programs like Medicare to ensure that they’re still around for future generations.

That's why the second part of this agreement is so important.  It establishes a bipartisan committee of Congress to report back by November with a proposal to further reduce the deficit, which will then be put before the entire Congress for an up or down vote.  In this stage, everything will be on the table. To hold us all accountable for making these reforms, tough cuts that both parties would find objectionable would automatically go into effect if we don’t act.  And over the next few months, I’ll continue to make a detailed case to these lawmakers about why I believe a balanced approach is necessary to finish the job.

Now, is this the deal I would have preferred?  No.  I believe that we could have made the tough choices required -- on entitlement reform and tax reform -- right now, rather than through a special congressional committee process.  But this compromise does make a serious down payment on the deficit reduction we need, and gives each party a strong incentive to get a balanced plan done before the end of the year.

Most importantly, it will allow us to avoid default and end the crisis that Washington imposed on the rest of America.  It ensures also that we will not face this same kind of crisis again in six months, or eight months, or 12 months.  And it will begin to lift the cloud of debt and the cloud of uncertainty that hangs over our economy.

Now, this process has been messy; it’s taken far too long.  I've been concerned about the impact that it has had on business confidence and consumer confidence and the economy as a whole over the last month.  Nevertheless, ultimately, the leaders of both parties have found their way toward compromise.  And I want to thank them for that.

Most of all, I want to thank the American people.  It’s been your voices -- your letters, your emails, your tweets, your phone calls -- that have compelled Washington to act in the final days. And the American people's voice is a very, very powerful thing.

We’re not done yet.  I want to urge members of both parties to do the right thing and support this deal with your votes over the next few days.  It will allow us to avoid default.  It will allow us to pay our bills.  It will allow us to start reducing our deficit in a responsible way.  And it will allow us to turn to the very important business of doing everything we can to create jobs, boost wages, and grow this economy faster than it's currently growing.

That’s what the American people sent us here to do, and that’s what we should be devoting all of our time to accomplishing in the months ahead.

Thank you very much, everybody.”

The debt compromise
Added on August 1, 2011 at 11:26 Riga time
Time pressure can help, but it is rarely the best adviser. The two parties have waited too long to come up with a convincing solution. President Obama said yesterday: “Now, is this the deal I would have preferred? No.” He added: “But this compromise does make a serious down payment on the deficit reduction we need, and gives each party a strong incentive to get a balanced plan done before the end of the year.” Until now, there is still no official written version of the possible US debt compromise available.

Article added on August 1, 2011 at 01:38 Riga time  
Finally, details of a possible US debt compromise emerge. After long talks, Democrats and Republicans have come to their senses in the last minute, have they?

A final deal has to pass both the Senate and the House and then be signed by President Obama. Many obstacles still lay ahead.

The deal itself - as presented by several sources - does not sound that exciting. It does not seem to be radical enough. The United States could lose its AAA rating.

The first step of the new deal would take immediate effect and raise the debt ceiling by about $1 trillion while cut spending by a bit more than $1 trillion over a decade.

In a second phase, a newly formed congressional committee composed of six Democrats and six Republicans would have to recommend until November 2011 at least additional $1.8 trillion in cuts, including entitlement programs such as Social Security, Medicare and Medicaid.

Tax increases are not part of the deal. However, the congressional committee could recommend them.

If the congressional committee failed to produce at least additional $1.5 trillion [corrected on August 2, 2011: sources spoke earlier of $1.8 trillion to find, but the actual deal is $1.5 trillion] in spending cuts, automatic spending cuts of $1.2 trillion would take effect. At the same time, the debt limit would automatically rise by $1.2 trillion too.

Social Security, Medicaid and food stamps would be exempt from the automatic cuts. However, Medicare, payments to doctors and nursing homes as well as subsidies to insurance companies offering alternative to government-run Medicare could be cut.

In total, the debt ceiling would be raised by $2.2 trillion, enough for the Democrats and President Obama to be save until after the 2012 election, whereas the Republicans would have loved to have 2012 debt debates. Will this proposal find the approved stamp from the Tea Party as well as enough moderate Republicans in the House? The looming default may push some to accept the compromise.

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