The RP’s Budget Crisis Update- August 1

President Obama and Congressional leaders have come to a compromise to avoid defaulting on the country’s loans and cut government spending. The two-step deal, which has been approved by Senators Harry Reid and Mitch McConnell Speaker John Boehner (but not yet Representative Nancy Pelosi), begins with the Boehener plan of $917 billion in cuts coupled with a $900 billion debt ceiling increase. This includes an immediate $400 billion increase through September and a later $500 billion increase, with Congress voting on resolutions of disapproval, which the President can subsequently veto. The second stage involves “Super Congress” cutting spending by $1.5 trillion by November, with a vote by the end of the year, at the peril of automatic across-the-board cuts. [CNN]

Even though a debt deal has been worked out, and many Republicans are pleased with the Speaker’s ability to reach a compromise, there are many in the House Republican Caucus, including many Tea Party-affiliated members, who have derided the bill as not going far enough. The challenge, now, is for John Boehner and House Minority Leader Nancy Pelosi to rally enough votes from their respective parties to pass the deal in spite of the flanks. [Politico]

On the other end of the spectrum, progressive members of Congress are taking issue with the deep cuts, including the possibility that Social Security, Medicare, and Medicaid may be on the chopping block if the 12-member board reviewing deficit cuts fails to reach a deal. In particular, Representatives Emanuel Cleaver of Missouri and Raul Grijalva of Arizona, who chair or co-chair the Congressional Black and Progressive Caucuses respectively, have already signaled that they do not plan to support the plan, and Nancy Pelosi was cautious with her support as of Sunday night. [Roll Call]

Even though the agreed-upon bill does not include any specific provisions to increase revenues, President Obama has said that the Bush tax cuts are included in the trigger, meaning that failure by the Super Congress to reach a deal by Thanksgiving will result in their repeal. [Huffington Post]

John Boehner used a PowerPoint presentation to sell the Obama-McConnell deal to his caucus on Sunday. Here it is. [National Journal]

The Washington Post provides a handy graphic illustrating which parties got and gave up what in reaching the deal being presented to Congress on Monday. [Washington Post]

With the House Republican caucus clearly split on whether or not to vote for the Obama-McConnell plan, all eyes are on House Minority Leader and former Speaker Nancy Pelosi of California. Pelosi, who has not specifically endorsed the deal as of Monday morning, also faces a caucus rife with division and distaste for the bill (though probably not as deeply divided as the Republicans), and the bill will not pass without some House Democrat support. In recent days, Pelosi and other senior Democrats have advocated for President Obama to invoke provisions of the 14^th Amendment and raise the debt ceiling without asking (or waiting) for Congressional approval. [The Hill]

Following the announcement of a debt deal, markets in Tokyo, Seoul, and Hong Kong gained between 1 and 2 percent apiece while Dow Jones, NASDAQ, and S&P 500 futures all climbed by about 1 percent. Additionally, gold prices, which were expected to climb in the event of a default, dropped after rising steadily for years to an all-time high. [National Journal]

It’s still early, but there already whip counts for the Obama-McConnell bill. The Hill lists 13 in favor, 6 opposed, and several hundred unknown, and Republican Senator Mike Crapo of Idaho has said that he expects some 35 Republican senators to sign on to the Obama-McConnell deal announced last night. [The Hill]