The RP’s Budget Crisis Update- July 31

Appearing on CNN Sunday morning, Mitch McConnell said that he and President Obama were “very close” to reaching an agreement on the debt ceiling. According to the Kentucky Senator, the deal would be a two-step process involving an immediate increase in the debt ceiling, a vote on the Balanced Budget Amendment, and a bipartisan committee to recommend spending cuts. [CNN] and [Washington Post]

According to former Moody’s Analytics economist Mark Zandi, the debt deal supposedly being worked out by the President and Republican members of Congress should be sufficient to avoid a credit downgrade for the United States. He did, however, admonish that if this deal breaks apart, it would plunge the country back into recession. [Politico]

Even as the House and Senate rejected or tabled each other’s bills Friday and Saturday, talks on Sunday rekindled hopes that a substantive bipartisan deal may still be possible. In particular, Chuck Schumer, Democrat of New York and Senate Majority Whip, said that while a final deal has not been worked out yet, there was a sense of “relief” in the Capitol Sunday morning. Recognizing that Democrats had compromised on some aspects of a budget bill, Schumer took pride from the fact that the Senate had kept at bay more drastic Republican measures, namely Paul Ryan’s budget. [Huffington Post]

Senior adviser to President Obama David Plouffe has said that, while there is no final deal in place between the President and Congressional leaders, a final deal could include provisions for $4 trillion in debt reduction by 2013. He has also said that, while there are no revenue increases in the first stage of the deal, the bipartisan committee charged with cutting further money from the deficit would have to include such measures in their recommendation. [Politico]

South Carolina Republican Senator Lindsey Graham, who himself has said he will not vote for the bill being worked on by President Obama and Congressional leaders, does not believe that more than about half of the House Republican Caucus will vote for that plan. Citing the possibility of increasing the country’s debt by $7 trillion, Graham expressed skepticism that Speaker Boehner would be able to sell the plan to House Republicans. [The Hill]

The Atlantic, as always, has some of the best quick analysis of what the rumored deal means, the pros and the cons: [Atlantic Wire]