In fact, staring at the real possibility of default in the face after weeks of confrontation, the two sides have agreed to let a “super committee” of lawmakers hash out about $1.5 trillion in budget cuts between now and November.
That leaves open the possibility that the Obama administration may not ultimately the full $2.4 trillion debt increase it wanted. On the other hand, there appears to be a fail-safe provision in the agreement that allows a $1.2 trillion debt increase next winter, even if the committee reaches an impasse.
While the dust is still settling, political analysts across the US, said for the second time this year, President Barack Obama has had to yield ground on domestic appropriations, moves that are likely to curtail the ambitions of the government.
The president himself appeared to concede as much when he announced the deal last night.
“Is this the deal I would have preferred? No,” Obama said during a hastily arranged appearance in the White House briefing room. “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 ensures that will we not face this same crisis in six months or eight months or twelve months,” he said.
Afterwards, White House officials said that as the “super committee”, a committee comprised of members of the Senate and the US House of Representatives consider budget cuts, “everything is on the table”.
The deal was constructed to save the government an initial $917 billion over the next 10 years and raises the debt ceiling by $900 billion.
As the super committee trims the budget further, the debt ceiling will rise by a commensurate amount. The deal is expected to fulfil the Us Treasury’s remaining borrowing needs through the 2012 election year.
The spending reductions themselves can be delayed to take effect in 2013 to soften the effect on the economy. And in some cases, across-the-board cuts could be used as a tool to fill gaps in the committee's work product.
Lawmakers asked about the fate of funding for renewable energy-related program and energy-efficiency initiatives said events moved so quickly over the weekend that the details were hard to pin down.
However, most agreed that grants for renewable energy programs and research are likely to be dramatically curtailed.
The House and Senate are scheduled to vote on the deal later today.
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