President, Congress reach debt deal
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The deal would raise the ceiling by $400 billion immediately and by another $500 billion after September.
It would also cut federal spending by nearly $1 trillion over 10 years.
A bipartisan debt-reduction committee would propose between $1.2 and $1.5 trillion in spending cuts by Thanksgiving.
This proposal would then be guaranteed an up-or-down vote without amendment by Dec. 23.
If Congress approves these cuts, the debt ceiling would be raised dollar for dollar for them.
If the committee deadlocks or comes up with less than $1.2 trillion in cuts or Congress votes down the cuts, the debt ceiling would be raised by $1.2 trillion.
Automatic across the board cuts of up to $1.2 trillion could then be triggered. They would be evenly divided between defense and non-defense spending.
Programs that aid low-income Americans, such as Social Security, Medicaid, veterans’ benefits and pensions, food stamps and Supplemental Security Income.
Medicare could only be cut 2 percent and would not reduce seniors’ benefits or increase costs.
The across-the-board cuts could be avoided by both houses of Congress passing a balanced budget amendment.
“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,” President Obama said.
“We can assure the American people tonight that the United States of America will not for the first time in our history default on its obligations,” said McConnell.
Last Tuesday the House voted 269-161 to approve the bill.
Rep. Gabrielle Giffords returned to the House to cast her vote in favor of the agreement.
Giffords was seriously wounded in a shooting in January.
The passage of the debt ceiling agreement may not avoid a downgrade of U.S. credit.
Rating agency Standard and Poor’s said on July 14, that there was a one-in-two chance that it would downgrade U.S. debt within 90 days.
Selmer Social Security
Office Manager Eddie
Meacham declined to
speculate on the impact of the debt ceiling agreement on his office.
He did say that there is a hiring freeze and that because of budget cuts previously enacted the office will be closing 30 minutes earlier beginning Aug. 15.
The office is presently open from 8:30 a.m. until 3:30 p.m.
This crisis could have had an extensive local impact for other social services.
Medicaid, food stamps and Temporary Assistance for Needy Families are all federally funded.
Department of Agriculture programs could also have had a local impact.
According to Jeff Hentschel of the Tennessee Department of Labor and Workforce, which runs the local offices that administer the unemployment compensation program and employment services, the 80 percent of the department’s budget comes from federal funds.
Unemployment benefits are paid from separate state and federal trust funds. It is unclear how a default would have affected these benefits.
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