When entire World is glaring at melt down of US economy from last one week with their raising debts, President Barack Obama and top congressional leaders have reached an agreement on a plan to increase the nation’s $14.3 trillion borrowing limit with spending cuts and to create a special committee to recommend bigger savings for a vote later this year.
Highlights of the Debt Limit Pact:
The plan would immediately increase the debt limit by $400 billion. Obama is permitted to order another $500 billion increase this fall unless both House and Senate overrides him by veto-proof margins. A third installment of between $1.2 trillion and $1.5 trillion would be made available after matching the levels of additional spending cuts recommended by a special joint committee.
The full $1.5 trillion could also be available if Congress adopts and sends to the states for ratification a balanced budget amendment to the Constitution.
The measure would cut more than $900 billion over 10 years from the day to day operations of Cabinet agencies whose budgets are passed each year by Congress. Both security and non-security programs would absorb outright cuts in 2012. Likely cuts in Defense to Pentagon which is among a group of programs that together would absorb a $4 billion cut from current levels next year.
$1.5 trillion more in deficit cuts over 10 years. Focus on Medicare, the Medicaid health program for the poor and disabled, farm subsidies and federal retirement programs. Options include increasing co-payments for Medicare and military health care and prescription drug coverage, cuts in direct cash payments to farmers, sales of broadcast spectrum to telecommunications companies and rules restricting insurance policies that supplement Medicare.
The plan would require both House and Senate to vote on a balanced budget amendment to the Constitution. Aimed at stemming abuses in Social Security and federal health care programs and preserve recent funding increases for Pell Grants for low-income college students by $17 billion over 2012-13, financed by curbs in student loan subsidies.
(Based on excerpts from Associated Press - Highlights of Budget and Debt Limit Pact)