After weeks of posturing and pleading, with threat of a default just days away, news of a possible debt ceiling deal is dribbling out of Washington, first reported by ABC's Jonathan Karl. The deal would raise the ceiling by $2.4 trillion in two phases, enough to last into 2013, in exchange for up to $2.4 trillion in cuts—$1 trillion over the next 10 years agreed to now, with up to $1.6 trillion in deficit reduction to be named later. The final amount in cuts would match the amount the debt ceiling is raised.
Congress would have until Dec. 23 to agree to the additional deficit reductions—which could include further spending cuts or tax increases. Should no deal be reached, an across-the-board cut would hit everything, including defense and Medicare, by up to 4%. Additionally, the deal would form a committee to make recommendations on cuts by late November, and schedule a vote in both the House and Senate on a balanced budget amendment.