After passing the House yesterday, a bill to lift the federal debt ceiling and avoid a default was approved by the Senate this afternoon and signed into law by President Obama.
The deal will put a ten-year cap on federal spending and raise the debt ceiling by a minimum of $2.1 trillion and a maximum of $2.4 trillion through the end of 2012. By the end of the year, the total limit on the national debt is projected to be between $16.4 trillion and $16.7 trillion.
The deal also includes a $7 billion reduction in FY 2012 spending below current levels.
The agreement will increase the debt in two stages:
The first stage requires $917 billion in savings, along with a $900 billion increase in the debt ceiling, over the next ten years. President Obama will have the authority to increase the debt ceiling by $400 billion through the end of September. The rest of the $500 billion will be up for a congressional vote and can vetoed by the President.
According to the agreement, the second stage could increase the debt limit from $1.2 to $1.5 trillion, including deficit cuts, in one of three ways:
1) A balanced budget amendment to the Constitution that would increase the debt ceiling an additional $1.5 trillion.
2) The formation of a joint congressional committee that would require up to $1.5 trillion in deficit cuts to be passed by the committee and Congress. The debt ceiling would only be increased by the amount that is cut.
3) If the first two options donâ€™t work, automatic, across-the-board government cuts of up to $1.2 trillion will occur. The debt ceiling would be increased by the same amount.
The White House provided a visual this week to explain the agreement.
Now, the question is: how will education fare?
Education already suffered $1.25 billion in cuts in FY 2010. However, education stakeholders should prepare for additional cuts as the law is enacted. Rep. George Miller (CA), Ranking Member of the House Education and the Workforce Committee, commented that cuts from the debt ceiling legislation are â€œgoing to make life much more difficultâ€ for public schools. Sen. Dick Durbin (IL) stated that â€œworking families and their childrenâ€ will be hurt. Despite these comments, there are no details in the bill as to which agencies will take cuts and by how much.
Congress will recess until early September.
Tags: debt ceiling