Congress Reaches Agreement to Raise Debt Ceiling, But At What Cost?

Posted Monday, August 1, 2011 by Angela Peoples with Zach Duffy

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  • Congress Reaches Agreement to Raise Debt Ceiling, But At What Cost?

After weeks of tense negotiations bringing the United States to the brink of default, President Obama announced on Sunday that Democrats and congressional Republicans have reached a tentative agreement to raise the nation’s debt ceiling through 2012. The consensus in DC and around the county is that the deal isn’t pretty—but neither is the alternative to compromise.

The proposed agreement calls for $2.4 trillion in spending cuts over the next 10 years and mandates the creation of a Congressional deficit-reduction “super committee.” The exact details of the rules governing the committee and the members who will sit on it are yet to be determined. But Speaker of the House John Boehner (R-OH)’s plan included a similar committee which would trigger automatic cuts to programs like Social Security and Medicare if its recommendations were not adopted by Congress. The committee will report its proposal by Thanksgiving.

The Obama Administration has said “this is not a perfect agreement” but indicated they are pleased with some of the provisions they fought to have included. One provision in particular, infusing $17 billion into the Pell Grant program, has been a top priority for President Obama. The agreement mandates adjustments to student lending programs, including ending both repayment incentives and the in-school interest subsidy on graduate student loans, saving about $21.6 billion. The remaining $4.6 billion in savings from student aid programs not used to offset Pell Grant shortfalls would be used for deficit reduction—a move that has been criticized by many education advocates as “robbing Peter to pay Paul.”

Support for the agreement from Congressional Democrats and Republicans was lukewarm at best.

House Minority Leader Nancy Pelosi (D-CA) distanced herself from the bill and when asked if it would pass in the House, said only, “You’ll have to ask the Speaker. He has the majority.”

Congressional Black Caucus Chairman Emanuel Cleaver (D-MO) called the agreement a “sugar-coated Satan sandwich.”

And Tea Party Republicans, including Michele Bachmann (R-MN), went on record saying they will vote to reject the deal.

Liberal groups like the Progressive Change Campaign Committee claim the debt deal“will kill our economy and is an attack on middle-class families”. Adam Green, the group’s cofounder, criticized the proposal for putting programs like Social Security, Medicare and Medicaid on the chopping block  while letting the wealthiest in our country off the hook. But without any better options and facing a quickly approaching Tuesday deadline before the U.S. Treasury runs out of money, many Democrats and Republicans were biting the bullet and coalescing around the reported agreement.

Tensions remained high in Washington as Congressional leaders continued to negotiate details of the deficit super-committee. Democrats said they’d like to see 50 percent of any spending cuts come from defense funding, while Republicans demanded that the super-committee be barred from considering tax increases in its deliberations.

Angela is the policy and advocacy manager for Campus Progress. She graduated from Western Michigan University.

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