The United States Government has never defaulted on its financial obligations before. If the debt ceiling isn't raised, we are going to default. (Some say this would ruin us, others say it wouldn't be that big of a deal.) But many agree a default is something to be avoided, so... the democrats and republicans have been fighting about whether the debt ceiling should be raised, taxes should be increased, spending should be decreased, and how the whole package is going to look. And they weren't really getting anywhere. Until yesterday.
Although, it still faces approval in the House and the Senate, democratic and republican leaders are reviewing a bipartisan compromise that, "will allow us to avoid default and end the crisis that Washington imposed on the rest of America," said Obama. The deal says, the debt ceiling can be increased up to $2.4 trillion, with equal cuts in spending of $2.4 trillion. The plan has two stages. First, immediate cuts in spending and an increase in the debt ceiling. Second, a bipartisan committee will be formed to cut $1.2 - $1.5 trillion in spending, with dollar for dollar increases in the debt ceiling for those cuts. As an incentive for compromise, if the committee deadlocks, $1.2 trillion in across the board cuts (with a couple of exceptions) will be triggered.
All lawmakers hope this agreement will stabilize the economy and preserve the US government's excellent credit rating. We shall see.
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