ABC Reports Tentative Debt Ceiling Deal Reached Between GOP And Obama

Tyler Durden's picture

This could very well be another red herring like the NYT article from two weeks ago that proved to be a dud, but for what it's worth according to ABC's Jonathan Karl, the White House and the GOP have just reached a tentative deal as follows...

  • Debt ceiling increase of up to $2.8 trillion 
  • Spending cuts of roughly $1 trillion
  • Special committee to recommend cuts of $1.8 trillion (or whatever it takes to add up to the total of the debt ceiling increase) 
  • Committee must make recommendations before Thanksgiving recess 
  • If Congress does not approve those cuts by late December, automatic across-the-board cuts go into effect, including cuts to Defense and Medicare.

In other words, virtually the same as the Boehner deal in the actual cuts, which will likely be back-end loaded (we expect about $10-20 billion in 2012 cuts), but the Democrats get what they want in that it will not require a second debt ceiling hike before Obama's re-elecetion as $2.8 trillion should last well into 2013. As for "future cuts", well, that's easily what Congress is so very good at. Indefinite future cuts that is.

Some more recent details from the National Journal:

Here are the outlines of a debt-ceiling deal that congressional leaders and the Obama White House are firming up in preparation for a possible announcement as early as Sunday afternoon. 

In many respects, the deal will, if approved by all parties, resemble the contours of a short-lived pact negotiated last weekend by House Speaker John Boehner, R-Ohio, and Senate Majority Leader Harry Reid, D-Nev. Obama rejected that deal, forcing Congress to wrestle with other inferior legislative options throughout the week.

Among the newest wrinkles, according to informed sources, is an agreement to extend the current $14.3 trillion debt ceiling very briefly to give the legislative process time to work without resorting to emergency, hurry-up measures.

President Obama has said he would only sign a short-term extension (days, not weeks) if it were linked to an extension of borrowing authority that lasts beyond the 2012 election. 

According to sources, the Senate would use the military construction appropriations bill, one currently available for action, as the vehicle for the short-term extension. This element of the arrangement, like everything else, is subject to modification. But those close to the negotiations expect Congress to slow things down without jeopardizing the nation's full faith and credit. A debt extension of days would achieve that goal.

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CompassionateFascist's picture

This is called a "trial balloon". A lead balloon.

DormRoom's picture

they probably want to leak it to see how the T baggers will react.

XenoFrog's picture

Only a total blithering retard wouldn't already know how the teapartiers will react.

Sock Puppet's picture

Let us hope they remain strong.

So Close's picture

If the "Tea Baggers" fail the result will be much worse in the long run.   Funny how the (True) fiscal conservatives are the best hope for the welfare/entitlement/social benefits class.  I sort of wish the Tea Party would just lay down and allow the debt to be run up until the bond vigalentes/money printing/worse inflation takes the whole ship down.


Raskolnikoff's picture

"T baggers" (this is the equivalent of the 'n' word)

DormRoom, I don't understand how people could continue to to use such inflamatory, downright childish language to describe people they disagree with. 

Anyway, all true lovers of America must be very happy with the actions of those newly elected members of the so-called 'tea party', they have withstood media pressure and obama and have standed strong!

Landrew's picture

Oh you mean like the Democrat Party as Limbo and company use to call the Democratic Party?T-Baggers, what is wrong with that title? A tea bag is a t-bag. I was a t bag until the Cock Brothers took over the party and turned it into a bizzaro world. People on Social Security and Medicare saying they hate Government programs ha! When I was there in 2004 we talked of flat income tax, stopping the wars, replacing the non-marketable treasuries in Social Security trust fund with marketable bonds holding congress responsible for the loans.

Mr. Denny Kneel's picture

What a disappointing comment. Being a member of the T-party is a choice last time I checked. Racism based on one's genetic predisposition is only a choice if you are on the giving end.

Nice attempt at trying to distract from the main issues of your cause though.

oldmanofthesee's picture

Not familar with this poster. Saw one other posting a couple of days ago. Both stupid. Just to help you out, the correct term is Tea partier.

DormRoom's picture

they probably want to leak it to see how the T baggers will react.

CrazyCooter's picture

Kabuki theatre pupeteers drag this into September scaring the market shitless, then sees Isreal nuke/invade Iran as planned, herding the investo-sheep away and then back into the fold (profiting both ways of course). After driving oil to 200/bbl on a 10% to 20% global export decline with the MENA in flames, slaughters the investo-sheep with a nice fat default.

The world then goes to the much vaunted gold standard (of which we then learn almost no government owns - including the US - oops), all debts (and taxes) then roll into the new global gold backed currency at some fixed rate of gold, rather than hyper-inflating the old debts, and suddenly the elderly are poor and the working class can't afford their obligations. Oh, and the "elite" own all the gold and thus all the money.

To top it off, with oil exports off 20% and the world descending into global execution of anyone with resrources, the carbon tax passes all major governments (for some really good sounding reason) producing a tax incentive to sequestor CO2 and thus saving the world. Oil companies step up, with books full of old lease properties and happily engage in mass "CO2 flooding", filling the production gaps at 200/bbl with a fat subsidy.

Oh, and this means that on top of that mandatory insurance (i.e. you are in trouble if you are not employed), breathing (illegal production of CO2) is now illegal if you can't pay for it (with the job you don't have).

Do I get a prize?

Sorry, been a rough weekend. I have to slather down in (sarcastic)PF-1TLN (sarcastic protection factor - 1,000,000,000,000) to keep the burn away these days. If only my SPF was on par with my C2H5OH tolerance ... I might be actually able to ... ahem ... tolerate collapse at that point.



P.S. Just venting ... carry on!

Hobbleknee's picture

Great post, but you forgot the death, starvation and rioting.

FeralSerf's picture

Death is the solution to starvation and rioting.

BandGap's picture

I hear you and feel your pain.

When the masses believe that breathing is the root cause of a made up global malaise then it's time for all of us to take a trip down the rabbit hole.

My biggest worry these days is my college boy drinking all the liquor I have stored for barter.  Best he get back to school while the gettin's good. Pushed most of my other kid's investements into PMs instead of stock/bonds and already have a 10% return.  That is, if his dreams ever see the light of day.

Hunker down, let the wave pass, come up for air and help with the clean-up.

Zero Govt's picture


Good post and what a good Masterplan too tiny 'variable' in this NWO Wonderland, a few billion people!

Got a crazy idea all this Govt control-freak stuff depends on people continuing to fund Govt. Namely paying their taxes. All this planning by the puppet masters of Govt floats on Govt staff (eg. State Police, crones, Depts, the Fed etc) getting paid wages. No tax coming in, no wages get paid, no staff, no power, ratchet or execution of said Masterplan

Crazy i know but if the people are radicalised, which is what major recessions cause (see all Revolutions happen in economic contractions), they might be crazy enough to defund Govt, stop paying their taxes and fueling/sponsoring this scumbag elitist State shit

the parasitical elite are rich but be assured they're parasites used to a constant stream of societies wealth (via Govt) to stay solvent. They require the dozy public and compliant business to continue funelling Govt to keep their State power base and protection racket staffed and equipped ...they couldn't afford to rig, mangle and vandalise free markets all by themselves nor abuse society with Law, Police and Military without your continual $Billions of sponsorship

Stop Paying Your Taxes ....see how quick this NWO Masterplan collapses (in a few weeks not months) ...this shit goes on for as long as we are stupid and dumb enough to keep funding it

FeralSerf's picture

It will become very difficult to stop paying "your taxes" when taxes are collected at the source, the plastic "money" that's inevitable.  No more paper currency, only ATM/credit cards with the tax collected whenever it's used.

As long as you hide your money in PMs, you might get away without paying "your fair share", but what good is money if you're not able to spend it on what you want or need?

A Nanny Moose's picture

Black markets may flourish in such an environment.

FeralSerf's picture

Of course they do.  That does not mean that getting what you want for your hard assets is easy though.  The Soviet Union and China in the 1970s are examples.  If someone turns you in for having prohibited assets, you could have been executed.

Like the current illicit drug trade , the more risk, the more profit.

DrunkHarryReid's picture

You have to be drunk to doublepost moron.

Chuck Walla's picture

Forgive him, its all the intellectual power he can muster.  He's just one more OFA parrot hoping desperately that, by insulting those he does not understand, somehow, someone might mindlessly vote for Braaaaack. like he will

BaBaBouy's picture

It's fine!!!

They Borrow $2.8 Trill to last 1.5 years, and they (TRY) to cut $2.8 Trill over 10 years...

AND we are now going into a new recession.


Good plan Boyz...

Print more paper Fiats, debt is out of control, and so much for the physcally resposible TEA BAGGERS.


Gold/Commods, its the only hope to preserve your wealth...

Nate H's picture

"Gold/Commods, its the only hope to preserve your wealth..."


Gold may go up, but the fact is that there is NO way to preserve wealth (if one has > $1 mil).  80%+ of paper claims are going away, and with them large chunks of freedom, services and goods availability. "Wealth" will not be in gold, but in friends, access to resources, natural capital, skills, knowledge, etc. 

Note: I am long some gold and silver but recognize the greater game here is a paradigm shift away from 'accumulation'.  There are lots of possible trajectories (between outright nationalization and currency collapse) but the one thing I am most confident on is that wealth amplitude is going away

NumNutt's picture

Actually the PM I am thinking might be the best investment at this point in the game would be led, with some brass attached to it.......

j0nx's picture

I think you mean lead, but yeah I agree with you 100%.

hedgeless_horseman's picture

Great summary!


More of WWBD? (What Would Banks Demand?)

Destroy thrift, and foster debt through low interest rates and inflation.

BaBaBouy's picture

Debt Ceiling Deal:   Why don't Reid and Boehmer just arm-wrestle for it ???

tom a taxpayer's picture


Breaking News:  EPA Toxic Substances Containment trucks were spotted speeding back and forth on Pennsylvania Avenue between the White House and Congress. Metro DC officials requested emergency EPA action after hundreds of pedestrians on Pennsylvania Avenue were overwhelmed by a "sickening stench" beginning about 9:30 pm Saturday night. Local health officials determined the source of the stench was the debt deal package (a.k.a. Senate bill 666: "Stinking Pile of Shit") being shuttled back and forth between the White House and Congress. 

In response, the EPA began shuttling the debt deal package in a hermetically-sealed truck. As the deal-making between the White House and Congress continued during the night, the concessions and compromises increased the stinking pile of shit. The resulting revised Senate bill 666, renamed "Huge Stinking Pile of Shit", requires a convoy of EPA hermetically-sealed trucks to shuttle between the White House and Congress.  

In response to D.C health officials asking when this growing pile of shit will stop, the White House put a positives spin on the "sickening stench" by saying it is a sign that a debt deal is imminent.


TruthInSunshine's picture

New York Grime is reporting this now, too -

What's hilarious (not) is that the proposed new bill would have a vote on a balanced budget amendment, but not require its approval in order to raise the debt ceiling. What a great, great (spineless) gesture:


A Mobilization in Washington by Wall Street


By and Published: July 30, 2011

After a year of clashing with Washington over new financial reforms, the country’s most powerful bankers have found common ground with regulators in the hard-fought effort to lift the debt ceiling and avoid a default.

Wall Street is no longer watching from the sidelines as the most polarizing political fight in years plays out on Capitol Hill. In the last few days, top executives have been in close contact with Washington in a last-ditch attempt to prod lawmakers toward a compromise by Tuesday, the administration’s deadline to reach a deal.

On Friday, Jamie Dimon, JPMorgan Chase’s chief executive, raised concerns with Treasury Secretary Timothy F. Geithner about the standoff over the debt ceiling and its potential to disrupt the system through which JP Morgan and other big banks disburse federal payments. Mr. Geithner assured him that the Treasury and Federal Reserve had taken steps to keep the payment system functioning smoothly, according to individuals briefed on the call.

In addition, more than a dozen chief executives from the nation’s biggest financial services firms wrote a joint letter to President Obama and members of Congress on Thursday warning of “very grave” consequences for the economy and the job market if an agreement wasn’t reached.

Sock Puppet's picture

Truth you seem pretty smart what is your story?  Are you just a current events junkie?

lilimarlene1's picture

warning of “very grave” consequences for the economy and the job market if an agreement wasn’t reached.


Since when did the banksters ever give a crap about jobs?

Pay Day Today's picture

Bankster speak translation: 'job market' refers to the executive career prospects and total remuneration including bonuses that bankster bosses receive from their respective Boards.

It certainly does not refer to the 'job market' for unemployed, unemployable and soon to be out of work plebeians.

The same general principle applies when a Bankster talks about "the economy".

Chuck Walla's picture

More meaningless frivolity for profit (theirs, not ours).  I can hardly wait to hear these lying turds tell us how seriously wonderful this is.

NuckingFuts's picture

Wait and see bitchez

NewThor's picture

Speaking of waiting and seeing...

Maybe it's time for ZEROHEDGE to start following the Elenin - Nibiru data.

there is some very interesting stuff coming out right about now




and the Earth

she is a rumbling.

Has Wall Street priced in Divine Celestial Intervention?


tom a taxpayer's picture

It ain't over til the fat lady sings.

fellatio is not fattening's picture

I hope you are wrong, I have heard Hillary Clinton sing and it still pains me

Conrad Murray's picture

Keep paying your taxes while we print you slaves into the dustbin. Muahahaha!

DoChenRollingBearing's picture

+ $1625 Conrad, you get a green one from me too!

Iam_Silverman's picture

"Keep paying your taxes while we print you slaves into the dustbin. Muahahaha!"

True, and sad.  The only consolation offered in this scenario is that we pay our taxes with the same devalued scrip they create!

tsx500's picture

I smell a false-flag 'event' coming sometime by end of 2011. Gonna get real interesting.

StormShadow's picture

Yep, need a good false flag to justify leaving the defense budget alone.  The MIC reigns supreme, you'll never see it truly cut--only for show.

Crassus's picture

There are plenty of true flags being hoisted to staff heads at the moment.

oldman's picture


This crisis is the 'false flag'.

baby_BLYTHE's picture

a false-flag on the anniversary of 9/11 would be a real F-U to the American people