Obama, Congressional Leaders Say Debt Deal Reached; Futures Soar

The President of the United States told the country on Sunday evening that Republican and Democratic leaders in the Senate and House of Representatives have struck a deal to raise the nation's debt ceiling. The tentative agreement comes after a weekend of intense negotiations on Capitol Hill. “The leaders of both parties in both chambers have reached an agreement that will reduce the deficit and avoid default,” President Obama said at the White House. “This compromise does make a serious down payment on the deficit-reduction we need. Most importantly it will allow us to avoid default.” The deal, which has not been voted on, raises the debt ceiling by $2.1 trillion and is expected to finance the United States through 2013. The framework of the deal calls for $917 billion in spending cuts over the next decade, along with an initial $900 billion raise in the debt limit this year and another $1.5 trillion early next year. A special committee will be tasked with finding another $1.5 trillion in deficit saving's by the end of the year. The committee will be made up of six Democrats and six Republicans and the savings are expected to come from changes to entitlement programs and from a sweeping tax overhaul. If the committee were to fail in identifying the $1.5 trillion in cuts, or Congress refuses to adopt its proposals, "triggers" will be enacted in which automatic cuts to defense and nondefense spending will be enacted. These "triggers" would not affect programs for low-income households, Social Security, Medicaid of other areas of Medicare. Congress is expected to vote on the plan tomorrow. "My hope would be to file it and have it on the floor as soon as possible," House Speaker John Boehner said on Sunday. Senate Majority Leader Harry Reid told reporters, "I am relieved to say that leaders from both parties have come together for the sake of our economy to reach a historic, bipartisan compromise that ends this dangerous standoff." He added, "The compromise we have agreed to is remarkable not only because of what it does, but because of what it prevents: a first-ever default on the full faith and credit of the United States." While the deal is widely expected to pass, given the support of President Obama along with Republican and Democratic leaders in both chambers of Congress, the vote could potentially be close. In the House of Representatives, in particular, both Progressive Democrats and Tea Party Republicans are displeased with the outcome of the negotiations. Progressives are upset because the proposal does not offer new revenues through increasing taxes on the rich. Conservatives are unhappy because they wanted deeper cuts, and some worry that the country's national defense could be weakened. The markets are reacting to the news out of Washington D.C. on Sunday evening with giddiness. S&P 500 futures were trading around 18 points, or 1.42%, higher at last check, while Dow futures were up around 173 points. Gold lost around 1% while silver shed 1.59% to $39.48. Crude oil rose 1.34% to $97.00 and the U.S. Dollar was trading slightly higher. Asian markets are also surging to start the week, with both the Nikkei and Hang Seng trading significantly higher.