President Obama announced on television Sunday, July 31st, just two days before the deadline, that the Democrat and Republican leaders have agreed on a plan allowing millions of people to breathe a sigh of relief. Now the senior citizens, the veterans, and anyone else who receives a check and benefits from the government know that they will get their dues in August. They do not have to worry if the bills are going to be paid, if there is going to be food on the table, and if they are going to be homeless or not. Of course, the budget deal doesn’t appear to be helping the stock markets any today, so you’re 401k’s will continue to look dismal.
This announcement that the lawmakers have reached a plan to raise the debt ceiling comes months after intense negotiations behind closed doors. The details that are available at this time state that the plan would slow government spending over the next decade by two to three trillion dollars. It would also give the United States enough borrowing room so there would not need to be another vote until the year of 2013. The lawmakers have figured out how to cut one trillion dollars immediately. The rest will be handled by a bipartisan committee of twelve lawmakers from both chambers. Congress will then vote on the cuts that they recommend.
The plan will also require a vote from both chambers on an amendment to the Constitution. This amendment will require the federal government to balance the budget every year. It is not the deal President Obama preferred but it is a deal that is going to keep the United States from defaulting and allow the United States to pay their bills.