While neither side of the aisle appears to be too happy with the results, Democrats seem to have emerged particularly bruised as the defecit reduction plan appears to be largely based on spending cuts versus new revenues. However, the debt limit was ultimately extended to 2013 and the nation’s financial ruin seems to have been successfully averted.
The deficit reduction plan will be phased in using two stages:
- Stage 1: Cut spending by nearly $1 trillion (yes, that’s 12 zeros) and raise the debt ceiling by $900 billion. Cuts will come mainly from establishing spending caps on current programs ($350 billion of which will come from military spending cuts).
- Stage 2: A joint committee made up of 12 members (6 from each Chamber with equal numbers of Democrats and Republicans) will have to duke it out to develop legislation that achieves at least another $1.5 trillion deficit reduction by Thanksgiving. This legislation must be voted on by December 23rd. If they can’t come to an agreement on legislation then an automatic “sequestration” is triggered, which will pull the additional funds needed by making across the board cuts (Social Security, Medicaid, Veteran’s benefits, and other essential benefits will be exempt from these cuts.
So, that’s it – in a nutshell. To learn more, check out the short fact sheet put out by the Democratic Policy and Communications Center.