Copyright © 2007 - Gary Blakeley: 416.278.5520

(Copyright © 2007 - Gary Blakeley: 416.278.5520)

Lawmakers Closing in on Debt Deal

By Politics FOXBusiness

Top congressional negotiators are closing in on a deal to increase the debt ceiling, in two stages, through the 2012 election, according to a source close to the negotiations.

Democratic and Republican leaders have tentatively agreed on a framework of guaranteed cuts of about $900 billion that were identified in previous bipartisan negotiations and a bill that passed the House Friday. Those cuts would increase the debt ceiling through this year.

A second debt limit increase would prompt one of three scenarios. The deal would direct a bipartisan committee to identify at least $1.5 trillion in savings over the next ten years. Those deficit cuts would be written into a bill that must clear Congress. If not, Congress must pass a balanced budget amendment to the Constitution and send it to the states for consideration. If Congress fails to pass either, the deal under discussion would force across-the-board cuts to government spending, including defense and Medicare, of at least $1.2 trillion, said a source close to the negotiations.

Congressional aides expressed concern that this framework too closely resembles House Speaker John Boehners original proposal introduced last week. A Republican source says that bill was designed to garner bipartisan support and was partially written by Senate Majority Leader Harry Reid. When Reid presented President Obama with that framework last Sunday, the president rejected it and Democrats throughout Congress followed through with their opposition, said the source.

The White House prefers one bill to increase the debt ceiling through 2012 in one step. Republicans have demanded that spending cuts exceed that $2.4 trillion debt ceiling increase.

The source close to talks said this framework is still tentative. An aide said congressional leaders who appeared on Sunday morning talk shows agreed not to discuss this framework publicly.

A congressional aide said leaders are hoping to announce this deal Sunday.

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