Live Blog: The U.S. Debt Battle aug. 1, 2011

• • 0:15 am
  • Investors Seek Riskier Assets, Gold Falls
  • by Market Talk
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  Gold remains under pressure from selling in Asia as market participants put their cash into riskier assets following U.S. lawmakers’ deal to lift the country’s debt ceiling.
  Spot gold was at $1,613.10 a troy ounce at 0352 GMT, down $14.10 from its previous settlement.
  Investors are instead putting their cash into riskier assets including base metals, which are mostly higher on the day. Traders say gold is expected to fall further in the near term but they anticipate a rebound from the selloff amid continuing worries over the euro-zone debt crisis. Any decision by credit ratings agencies to downgrade the U.S. from its AAA rating could also see investors returning to gold as a safe store of value, they say.
  Silver is trading lower in line with gold and is 47 cents down from its previous settlement at $39.43 an ounce.
• • 1:51 am
  • Asian Officials Welcome US Debt Deal, With Caveats
  • by Michael S. Arnold
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  Officials from around Asia-Pacific welcomed the apparent resolution to the U.S. debt ceiling impasse Monday, but warned that it was just a first step toward getting America's debt problem under control.
  "This is such an important step, but they've got to go to the next step," Australian Treasurer Wayne Swan told SkyNews television. "We've got to see a pathway from fiscal consolidation in the U.S. We need that for global certainty."
  Asian markets and currencies rallied when the deal was announced. With Asian governments among the largest holders of U.S. Treasurys, the generally positive reaction here to the bargain between Democrats and Republicans should help the U.S. continue to finance its deficits cheaply.
  "When it comes to safe-haven assets, there's no alternative to U.S. Treasurys," said Huh Jin-ho, chief of the Bank of Korea's global economy research division.
  But the risk-on mood soured a bit as the day wore on and investors realized that a potential downgrade of the U.S. credit rating--which would reverberate through financial markets around the world--wasn't off the table.
  Mohamed El-Erian, CEO and co-chief investment officer at bond giant PIMCO, told Dow Jones' Sydney bureau that the position of Standard & Poor's, which took the hardest line on the debt impasse among the major ratings agencies, would be critical.
  "The impact on the AAA (rating) will depend on whether S&P sticks to what it stated back on July 14 when it placed America's rating on negative watch," he said. "A strict interpretation by S&P speaks to the likelihood of a downgrade, though I suspect the agency is under enormous pressure not to do so."
  S&P and Moody's, which has also put U.S. debt on watch for a possible downgrade, declined to comment.
  Zhu Baoliang, chief economist of the State Information Center's forecasting department under China's National Development and Reform Commission, told Dow Jones the deal would ease long-term investors' worries, but described the chance of a U.S. downgrade as "still a large one."
  In case of a downgrade, "countries all around the world would be less willing to hold dollars, resulting in a greater flow of capital to emerging markets, including China," Zhu said. "China will experience great pressure to let the yuan rise faster, which will likely compel the PBOC to act."
  An adviser to the People's Bank of China said it would take time for U.S. officials to restore market confidence. But most Asian officials agreed Monday's deal should help stabilize financial markets.
  "Of course it's a good thing that concerns (over the U.S. debt issue) are fading," Japanese Finance Minister Yoshihiko Noda told reporters. "I hope that will be firmly reflected in the market."
  An official at South Korea's Ministry of Strategy and Finance said the deal shouldn't have any serious negative impact on the local market, for example by speeding up inflows of foreign capital.
  In Indonesia, a top Finance Ministry official said that with a deal now agreed global liquidity should remain flush, sending more money flowing to hot markets like Indonesia's.
  "The (U.S.) policy rate will likely be kept low so capital inflows to emerging markets, especially Indonesia, will remain strong," said Rahmat Waluyanto, director general of debt management at the Finance Ministry.
• • 2:43 am
  • German Bunds Slip
  • by Neelabh Chaturvedi
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  German bunds fell as the U.S. debt deal lifted risk sentiment, denting demand for low-yielding safe haven government bonds. European equities are expected to open higher.
  The final release of euro-zone manufacturing PMI comes out at 8 a.m. GMT, followed by the U.S. ISM manufacturing report at 2 p.m. GMT. September bunds are down 0.25 at 130.11 and the 10-year bund yield is up 3 basis points at 2.574%.
• • 3:14 am
  • Europe's Markets Start Higher After Debt Deal
  • by Michele Maatouk
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  European stocks opened sharply higher Monday, as market participants welcomed a deal to raise the U.S. debt ceiling, alleviating worries about a potential credit downgrade or default.
  London’s FTSE 100% started 1.3% higher, Frankfurt’s DAX also added 1.3% and Paris’s CAC-40 Index gained 1.2%.
  Despite the positive open, traders cautioned that the deal still needs to be passed by the Senate and the House of Representatives. At the same time, doubts remained over whether the plan will be enough to prevent credit-ratings firm Standard & Poor’s from cutting the U.S.’s coveted triple-A rating.
  The Republicans will need to sign off on the deal for it to go to the President and be enacted, and several prominent Republicans have offered support, said Rabobank.
  “But the Republicans also need to receive agreement from their rank-and-file and this is a potential stumbling block as Republicans who subscribe to the Tea Party view of the world are yet to offer their opinion of the deal,” it said. “They need to discuss specifics with rank-and-file members and comments on these discussions will likely be hitting the headlines later today and will be critical in determining whether the market factors in a firm agreement.”
  
• • 4:28 am
  • SocGen Says Dollar Has Little Reason to Rise
  • by Eva Szalay
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  The U.S. dollar has little reason to rise, Société Générale says, as currency strategist Kenneth Broux notes that despite the debt-ceiling deal, the threat of a credit downgrade and signs of a faltering recovery will keep investors away from the greenback.
  "Markets have welcomed the fact that the U.S. will probably avoid default, but the door is still open for more [quantitative easing] from the Fed as the recovery is slowing and the threat of a downgrade persists," Mr. Broux said.
  He added that investors will be watching for Friday's nonfarm payrolls data, and will probably start positioning for more quantitative easing if the data print is disappointing.
• • 4:34 am
  • U.S. Debt-Insurance Costs Fall
  • by Art Patnaude
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  The cost of insuring U.S. debt against default dropped Monday after President Barack Obama announced that leaders from the country's two major political parties reached an agreement to avoid default.
  If passed by both chambers of Congress, the plan would raise country's borrowing limit and reduce the federal deficit.
  Diminished fears that Democrats and Republicans would fail to reach a compromise, prompting the country to register a technical credit default, has boosted European credit markets.
  Around 3:55 a.m. ET, the five-year credit default-swap spread on the U.S. was 0.09 percentage point tighter at 0.52 percentage point, according to data-provider Markit, which means it now costs an average of €52,000 a year to insure €10 million of debt issued by the country.
  CDS are derivatives that function like a default insurance contract for debt. If a borrower defaults, sellers compensate buyers.
  One-year CDS protection costs 0.64 percentage point, a fall of 0.11 percentage point from the closing level Friday.
  Mr. Obama's announcement comes after months of fierce negotiation and just ahead of an Aug. 2 deadline which, if not met, would leave the U.S. government short of the estimated funds needed to pay its bills, including servicing its debt.
• • 5:21 am
  • Stock Futures Rise After Debt Agreement
  • by Simon Kennedy
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  U.S. stock futures rallied Monday after President Barack Obama and Senate leaders reached an agreement on raising the federal debt ceiling and cutting spending.
  About four hours before the start of trading, futures on the Dow Jones Industrial Average rose 135 points to 12223 and Standard & Poor’s 500 index futures were up 13.50 points at 1301.90. Nasdaq 100 futures rallied 27.25 points to 2386.50.
  
• • 5:56 am
  • Germany Welcomes U.S. Debt Compromise
  • by Bernd Radowitz
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  Germany's government Monday welcomed the compromise of both major U.S. political parties on the country's debt and deficit ceiling to avoid an imminent default.
  President Barack Obama said Sunday  that leaders of both U.S. parties reached an agreement to lift the U.S. debt ceiling, reduce the federal deficit and avoid a U.S. credit default.
  "The (German) federal government is satisfied that there has been an agreement in this difficult question in the United States," Christoph Steegmans, deputy spokesman for German Chancellor Angela Merkel, said at a regular government press conference.
  Mr. Steegmans said the German government had been prepared for the hypothetical case that no deal were to be reached in the U.S., but he refused to give details of any possible emergency measures.
  He  didn't want to make any further comment on the situation, saying that the issue was an internal U.S. matter.
  
• • 7:37 am
  • McCain Says He'll 'Swallow Hard' and Support Deal
  • by The Associated Press
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  Sen. John McCain says he'll vote for compromise legislation averting a government default, although "I will probably have to swallow hard."
  The Arizona Republican who lost to Barack Obama in the 2008 presidential election says he's concerned about the impact of the deficit-reduction deal on defense spending.
  But Mr. McCain also tells CBS's "The Early Show" that officials in Washington realized "we were not going to let the government shut down."
  He also says that while he's worried about the Pentagon budget, he believes the new, special committee that will be established to follow through on promises of deficit-reduction will be more successful than similar panels established for this purpose in the past.
  Mr. McCain notes the new panel will have the authority to order "up or down votes" on proposed cuts.


• • 7:46 am
  • House Posts Text of the Debt Deal
  • by Joseph B. White
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  The House and Senate could vote today on legislation to put into effect the debt and deficit deal struck by President Barack Obama and congressional leaders Sunday night. Here’s the text of the bill, posted at house.rules.gov.


• • 8:25 am
  • By the Dawn’s Early Light
  • by Joseph B. White
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  Reviews are coming in for the new, improved “Budget Control Act of 2011" and it’s fair to say there’s something in the bargain for commentators on both ends of the political spectrum to hate. Here’s a sampling:
  Liberal blogger Jane Hamsher at Firedoglake.com is not a fan, and has coined a new name for what the legislation calls the “Joint Select Committee on Deficit Reduction” that will hunt for $1.5 trillion in deficit cuts. Her moniker: “Catfood II Super Congress.”
  Heritage Action, the political wing of the conservative Heritage Foundation:
  “We are skeptical of “super committees” tasked with brokering grand bargains and we are adamantly opposed to committees that are given the authority to raise taxes on the American people and to bring about the gutting of our national defense budget. This deal highlights how dysfunctional Washington has become and we will continue to oppose it as insufficient to the task at hand.”
  Paul Krugman, liberal economist and New York Times columnist, tweeted: The President Surrenders on Debt Ceiling.
  William Kristol at the Weekly Standard worried that the deal could “gut defense.”
  “Members of Congress and their staff who know and care about defense are somewhere between alarmed and panicked at the emerging shape of the debt ceiling deal.”
  The reviews that really matter, of course, will be the votes of members of the House and Senate. Those could start coming in later today.


• • 8:44 am
  • Deciphering the Cuts in the Budget Deal
  • by David Wessel
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  The agreement struck by President Barack Obama and the bipartisan leadership of Congress cuts $917 billion over a decade from annually appropriated defense and domestic spending, a down payment on promises of deeper deficit reduction in the future.
  But--as always in these budget games--the big question is cut from what.
  The answer: from the Congressional Budget Office’s March projections of what annually appropriated spending would be if it increased for inflation (See Table 1 in CBO’s July 27 letter to House Speaker John Boehner for details of the CBO baseline
  By that yardstick, $917 billion over 10 years is a significant cut from the more than $12.1 trillion in total annually appropriated spending that CBO projects Congress would spend between fiscal years 2012 and 2021 if appropriations kept pace with inflation.
  In Washington, promises to cap spending a decade in the future are often disregarded because so much can change. The focus instead is on the near-term decisions that the current members of Congress and the current president have to make.
  On that score the Republicans won President Obama’s acquiescence to significant cuts.
  For fiscal 2012, the agreement caps spending at $1.043 trillion. That’s $44 billion, or 4.2%, below the CBO March baseline of $1.087 trillion. (The March baseline incorporates spending cuts enacted by Congress earlier this year.)
  For fiscal 2013, the agreement caps spending at $1.047 trillion. That’s $62 billion, or 5.6% below the CBO March baseline of $1.109 trillion.
  The numbers are what’s known as budget authority, the money that Congress puts in the government’s checkbook, not all of which is spent in a given fiscal year. The money that actually flows out of the checkbooks is called “outlays,” and it is--just to make things complicated--those outlays that are used to calculate the annual deficit.
  Annually appropriated spending covers everything from National Park Service rangers and grants to cities to bullets for the Army’s guns and FBI agent salaries. It does not include Social Security, Medicare, Medicaid and all the other benefit programs for which money flows automatically each year. It doesn't include interest payments on the national debt, either.


• • 9:37 am
  • Again, Boehner Needs Votes
  • by Patrick O'Connor and Corey Boles
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  All year long, House Speaker John Boehner has struggled to corral his large but raucous Republican majority. Now comes the ultimate test.
  Mr. Boehner told his rank-and-file Sunday night that he had come to agreement with the White House on a deficit-cutting deal that still needs to pass through his chamber. It's less conservative than the one he jammed through last week, and the vote could go down-to-the-wire.
  At stake is both the deal itself but also the speaker. If Mr. Boehner has to pass the vote by relying on Democratic votes—and if he loses more than half of GOP lawmakers in the process—he might avert default while imperiling his effectiveness as a leader.


• • 9:39 am
  • Off to the Caucus-Races
  • by Joseph B. White
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  Members of Congress will spend the morning in caucus meetings, where leaders of the various factions will try to line up votes for (or against) the $2.4 trillion debt and deficit deal.
  The Progressive and Congressional Black Caucus is scheduled to meet at 11 a.m. ET. Senate Democrats and Republicans will gather their respective members at the same hour. House Democrats are scheduled to caucus at noon, and House Republicans are supposed to meet at 12:30 ET. When voting will start in either the House or Senate isn’t clear yet.
  


• • 9:49 am
  • Stocks Gain on Debt Deal
  • by Brendan Conway
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  U.S. stocks joined the global relief rally. The Dow Jones Industrial Average jumped 125 points, or 1%, to 12268 at the open, reversing about a quarter of last week's steep losses. The Standard & Poor's 500-stock index gained 15 points, or 1.2%, to 1307 and the Nasdaq Composite rose 39 points, or 1.4%, to 2794.


• • 9:53 am
  • Senate Democrats Weigh In on Deal
  • by Rob Wells
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  The Senate Democrats offer this handy cheat-sheet on the plan to raise the debt ceiling by $2.4 trillion and reduce the deficit by a similar amount. So far, no votes have been scheduled in either the House or the Senate. After all of the caucus pow-wows, the leaders are expected to bring the bill to the House and Senate floors for a vote.


• • 10:01 am
  • Biden Goes to the Hill
  • by Joseph B. White
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  Vice President Joe Biden will go to Capitol Hill this morning to sell the debt and deficit deal to Senate and House Democrats. The White House says Mr. Biden will meet with Senate Democrats at 11 a.m. and House Democrats at noon. Mr. Biden had a central role in negotiating the $2.4 trillion deal with Senate and House Republican leaders.


• • 10:16 am
  • by Mark Gongloff
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  The relief rally has been erased. Stocks are deep in the red now, after opening higher, on a dismally bad ISM report. The ISM factory index was 50.9 in July, compared with expectations of 55. The Dow is down 79 points, after opening about 100 points higher. The S&P is off 9 points. The 10-year Treasury yield is now 2.76%.


• • 10:37 am
  • Biden Starts Selling
  • by WSJ Staff
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  Vice President Joe Biden’s visit to Capitol Hill this morning suggests the White House recognizes it has a selling job to do to convince many Democrats to vote for the debt and deficit deal.
  Many Democrats expressed dismay with the agreement Sunday, complaining that it appears to favor spending cuts over more taxes for the wealthy. House Minority Leader Nancy Pelosi (D., Calif.) was notably lukewarm in her reaction to the agreement, saying that House Democrats would review it and decide how much support they could give it.
  Members of the Progressive and Black Caucuses meet at 11 a.m. and their reaction could be an indicator of how much trouble the White House will have rounding up enough votes to get the deal through the House.


• • 10:39 am
  • Romney Blasts Debt Deal
  • by Joseph B. White
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  Republican presidential candidate and former Massachusetts Gov. Mitt Romney is out with a statement blasting the debt-ceiling deal. “As president, my plan would have produced a budget that was cut, capped and balanced – not one that opens the door to higher taxes and puts defense cuts on the table.”


• • 10:53 am
  • Pawlenty: Debt Deal "Nothing to Celebrate"
  • by Danny Yadron
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  Former Minnesota Gov. Tim Pawlenty’s campaign said Monday morning that the debt-ceiling deal is “nothing to celebrate,” though it did not say whether Mr. Pawlenty would sign the bill if he was president.
  The statement from campaign spokesman Alex Conant:
  “This deal is nothing to celebrate. Only in Washington would the political class think it’s a victory when the government narrowly avoids default, agrees to go further into debt, and does little to reform a spending system that cannot be sustained by our children and grandchildren. While no further evidence was needed, this entire debt ceiling fiasco demonstrates that President Obama must be replaced.”


• • 11:02 am
  • The Next Round in the Debt-Ceiling Fight? Cutting Defense
  • by Nathan Hodge
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  Ahead of votes on the debt-ceiling deal, a new debate is already taking shape: The impact of potential new cuts on national defense.
  The bipartisan debt deal outlines savings of $350 billion from the Pentagon’s base operating budget, savings that would be realized over 10 years. According to a White House fact sheet, proposed reductions would be “based on the outcome of a review of our missions, roles, and capabilities that will reflect the president’s commitment to protecting our national security.”
  As it happens, that kind of top-down review is already under way at the Pentagon – and the defense budget is already in line for a haircut. Earlier this year, the White House set a goal of $400 billion in trims to security spending over the next decade, and top military brass launched a sweeping review of defense priorities, with the aim of identifying those cuts.
  Members of the House and Senate Armed Services Committees are now scrutinizing the new, bipartisan debt plan. And while committee chairs have to pronounce on the subject, defense hawks have already prepped the battlefield in anticipation of a new round of defense cuts.
  Their opening salvo: A July 26 hearing held by the House Armed Services Committee’s readiness panel, chaired by Rep. Randy Forbes (R., Va.). The hearing, which featured testimony from the vice chiefs of the Army, Navy, Air Force and Marines, raised the alarming prospect of a “hollow” military that would not be ready to fight if new cuts were added to the current $400 billion target.
  Rep. Howard McKeon (R., Calif.), the chairman of the House Armed Services Committee, echoed some of the points from that hearing in a statement this weekend that blasted the debt plan of Senate Majority Leader Harry Reid (R., Nev.). Rep. McKeon’s argument? After a decade of war, the military’s equipment is getting dangerously out of date.
  “Our Navy fleet is eroding, the smallest it has been since 1916,” he said. “The Army and Marines are stretched dangerously thin, separated from their families and using hardware that has been chewed up by a decade of fighting. In 1990, the Air Force had 82 fighter squadrons, today it has just 39. Those planes average over 30 years of age, forcing constant maintenance to keep them in the air.”
  But Republican hawks aren’t the only voice in this debate. Watchdog groups in Washington are taking aim what they see as wasteful spending programs that can be safely cut without threatening national security.
  The uniformed military will have a say. Over the weekend, Adm. Mike Mullen, the chairman of the Joint Chiefs of Staff, fired off a provocative tweet from Afghanistan, writing: “Great day with troops in southern Afghanistan. They're making a difference & they know it. But debt debate weighs heavily on their minds.”


• • 11:07 am
  • Reid: Senate Vote 'Hopefully' Today
  • by Andrew Ackerman
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  Senate Majority Leader Harry Reid (D., Nev.) said on the Senate floor just now that a vote on the debt deal would “hopefully” come during today’s session. But he offered no details on timing. Senate Democrats and Republicans will caucus separately around noon. With the stock market in the red on downbeat economic news and continuing fears that the U.S. will lose its Aaa credit rating despite the $2.4 trillion deficit-cutting agreement, the temptation to avoid a close vote while U.S. markets are open may be too much to resist.


• • 11:11 am
  • Cost of Default Insurance on U.S. Debt Retreats
  • by Katy Burne
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  The cost of protecting U.S. Treasurys against nonpayment using credit-default swaps nose-dived Monday, after the government agreed on a framework for cutting $2.4 trillion in spending while raising the federal borrowing limit in time to avoid default.
  
  Credit-default-swap protection over the next 12 months is now cheaper than protection over five years, reversing a run-up in near-term CDS costs that had overtaken the cost of five-year protection when no debt-ceiling compromise was in sight.
  
  "With both houses of Congress expected to vote on a negotiated deal this afternoon, the market's fear of some of the more worrisome scenarios seems over," said Otis Casey, credit analyst at data provider Markit.
  
  One-year CDS were quoted Monday at 0.45 percentage point, down from 0.75 percentage point Friday and a move equivalent to a drop of €30,000 in the cost of protecting €10 million ($14.4 million) of U.S. government debt, according to Markit. Five-year CDSs were quoted at 0.50 percentage point, down from 0.60 percentage point Friday and translating to a €10,000 drop in the annual cost of protection.
  
  The record-high cost of protection on U.S. debt was €100,000 annually for five-year protection, reached in March 2009 as market participants hesitated to lend to one another in the wake of the financial crisis. The record one-year cost of CDS was €82,000, reached last Thursday as fears grew before the weekend.
  
  Monday's CDS levels now imply a credit rating of double-A on U.S. Treasurys, lower than their current triple-A rating and consistent with what some ratings companies believe is more appropriate for U.S. sovereign debt. Standard & Poor's, for example, has threatened to cut the U.S. credit rating if Congress doesn't produce viable austerity measures that will fix the U.S. deficit over the long term.
  
  The debt deal reached over the weekend "doesn't get us past the downgrade hurdle," said Ian Lyngen, senior government bond strategist at CRT Capital Group LLC, "but now the rating agencies have something to work with."


• • 11:38 am
  • CBO Weighs In: Debt Deal Cuts $2.1 trillion
  • by Joseph B. White
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  The Congressional Budget Office is out with its official scoring of the new Budget Control Act of 2011, and says the deal will cut $2.1 trillion over the 2012-2021 period, compared to a spending outlook set in March 2011.  Congressional leaders and the White House said Sunday the deal would cut as much as $2.4 trillion in spending. Here’s a link to the CBO Report. Click here for the report.


• • 12:00 pm
  • A Fireside Chat
  • by Joseph B. White
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  President Barack Obama’s re-election campaign sent out a video of Mr. Obama explaining how the debt ceiling deal works.  Seated in front of a fireplace, Mr. Obama speaks for a little over two minutes, and outlines his view of the pros and cons of the deal. Click here for video.
  The underlying message: The President’s argument with Republicans over how to rein in deficits isn’t over by a long shot.
  Mr. Obama hails the “agreement between both parties” that produced Sunday’s deal. Then he goes on to say the “ultimate solution” to the nation’s fiscal problems “must be balanced. Big corporations and the wealthiest Americans shouldn’t be exempt from kicking in. That’s just fair.” He also reassures his base that he wants “modest adjustments” to federal health care programs such as Medicare.
  The debate over the debt ceiling “has launched an important debate about how we approach the challenges we face,” Mr. Obama says.
  “Launched,” as in what just happened was only the beginning.


• • 12:10 pm
  • Conservatives Line Up to Say No
  • by Kristina Peterson and Siobhan Hughes
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  Conservatives are starting to line up against the debt ceiling deal.
  Sen. Lindsey Graham, the South Carolina Republican, came out against the deal this morning. “I cannot in good conscience support this deal,” he said in a written statement. “Simply stated, it locks us into more debt, bigger government and most devastating of all, a weakened defense infrastructure at a time when we face growing threats.”
  Mr. Graham’s opposition is notable because his stance could also further embolden the state’s GOP House members who refused to vote for Mr. Boehner’s original compromise bill last week.
  Rep. Tim Huelskamp (R, Kan.) said he’s a no vote. "It's not enough,” he said on CNBC. “I really feel we're still going to have a downgrade because we simply didn't cut enough."
  Sen. Rand Paul (R., Ky.) said he “can't support any plan that never balances," the budget.
  Meanwhile the Cut, Cap and Balance Coalition, a group of conservative lawmakers whose objections to earlier deals were influential in the House, said Monday morning it also couldn't support the proposed deal.
  


• • 12:17 pm
  • Whither the Bush Tax Cuts
  • by Jared Favole
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  The ink hasn't dried on a proposal to cut the country's deficit, but the White House is already threatening that President Barack Obama will use the veto pen to ensure stand-alone attempts to extend some tax cuts are blocked.
  The issue of what happens to the Bush tax cuts – which benefit middle class and wealthy tax payers – promises to be a central point of contention as Congress and the White House wrangle to put their outline of the debt ceiling deal into effect over the coming months.
  As the White House noted in its summary of the deal, the Bush tax cuts expire as of Jan. 1, 2013 – the same day that automatic spending cuts would go into effect unless Congress agrees to accept the recommendations of a special deficit cutting committee.
  “These two events together will force balanced deficit reduction. Absent a balanced deal, it would enable the President to use his veto pen to ensure nearly $1 trillion in additional deficit reduction by not extending the high-income tax cuts,” the White House summary says.
  Gene Sperling, director of the White House National Economic Council, during an appearance on CNN signaled the president will veto a package that extends tax breaks for the wealthy without a broad overhaul of the tax code.
  "And remember this president also has the veto pen to ensure that the tax cuts for the most well off are not extended if we do not get the type of tax reform that is fair to the middle class," Mr. Sperling said.


• • 12:26 pm
  • DeMint Says No – to a Filibuster
  • by Kristina Peterson and Joseph B. White
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  Sen. Jim DeMint (R., S.C.), one of the strongest voices against increasing the federal debt ceiling without first passing a balanced budget amendment, says he won’t filibuster to block a vote on debt-ceiling deal worked out with House and Senate leaders and the White House. Mr. DeMint, a tea-party favorite, has warned fellow Republicans against supporting what he views as weak deficit cutting deals. It isn't clear that his decision not to filibuster means Senate Democrats can pass the debt ceiling deal with a simple majority, but it helps.


• • 1:01 pm
  • GOP Presidential Hopefuls Side With Conservatives on Debt Deal
  • by Danny Yadron
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  Republican presidential candidates have mostly panned a debt ceiling deal negotiated by the White House and congressional leaders, opting to side with the GOP’s conservative wing over lawmakers and voters who said the U.S. needs to compromise to avoid default.
  Tea party favorite Rep. Michele Bachmann (R., Minn.) came out hard against the deal Sunday night, declaring that, “someone has to say no. I will.” By Monday morning, former Massachusetts Gov. Mitt Romney and former Minnesota Gov. Tim Pawlenty had followed her lead.
  Mr. Romney said the compromise, which has yet to clear its first vote in Congress, opened the door to increased taxes and unneeded defense spending cuts. “While I appreciate the extraordinarily difficult situation President Obama’s lack of leadership has placed Republican Members of Congress in, I personally cannot support this deal,” he said in a statement. Read full post


• • 1:02 pm
  • Chamber Tells Lawmakers Debt Vote Could Count Toward Election Support
  • by Laura Meckler
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  The U.S. Chamber of Commerce is pushing Congress to support the debt ceiling deal, telling members that their vote will be included on the Chamber’s year-end “scorecard” evaluating each member’s support for chamber priorities.  The scorecard is also one factor used in deciding who to endorse and who to support with TV ads and other expenditures.
  “As is the nature of all compromises, this bill is not perfect,” Chamber president R. Bruce Josten said in a letter sent today to all members of the House. “But this legislation is the right thing to do, now.” A similar letter is being sent to senators.
  Lawmakers who get score at least 70% on the scorecard are given the Chamber’s “spirit of enterprise” award, essentially their label for who the group thinks is pro-business. In 2010, the Chamber scored nine votes in the House and 11 in the Senate.


• • 1:03 pm
  • What Do Economists Think?
  • Add a Comment
  Here’s a roundup of reactions from economists to the debt ceiling deal, compiled by Justin Lahart at Real Time Economics. Read full post.


• • 1:20 pm
  • House Democrats Uneasy With Deal
  • by Siobhan Hughes and Patrick O'Connor
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  House Minority Leader Nancy Pelosi (D, Calif.) on Monday headed into a closed-door party meeting amid discontent among a number of Democratic House lawmakers over the debt ceiling deal, saying she remains uncommitted on the plan and wants to hear from rank-and-file members.
  "We're very concerned that a bill that makes these big cuts and has not one red cent from the wealthiest people in our country - no revenue - is very disconcerting," Ms. Pelosi said.
  Ms. Pelosi did tout some aspects of the plan, saying "positives" include the debt ceiling extension through the end of 2012 and the split of automatic spending cuts between non-defense discretionary and defense spending.
  "We could not accept anything other than a full 18-month, at least 18-month, extension of the debt limit...that has been accomplished," Ms. Pelosi said.
  Democrats headed into the meeting mostly said that they were either undecided or voting no. "I'm pretty much leaning toward no," said Rep. Steve Cohen (D, Tenn.).
  Democratic opposition matters because House Speaker John Boehner (R, Ohio) faces opposition from the conservative wing of his party and may need Democratic votes to drive the deal through the House. Asked how many votes Democrats could deliver, Rep. Joseph Crowley (D, N.Y.) said "my question is how many Republican votes can we deliver for this? They're the majority in the House and it's their responsibility to produce votes for a bill they created."
  The comments came before Vice President Joe Biden was to address the caucus. The vice president may face a anger when he meets with his fellow Democrats.
  Asked whether U.S. President Barack Obama had tried hard enough to get a deal that was good for Democrats, Rep. Peter DeFazio (D, Ore. ) said "Come on -- any other jokes?"  He said that the White House "minimally could have restored funding and taxation that funds the Federal Aviation Administration -- they didn't even do that. There is no investment, no jobs coming out of this bill."
  Rep. Jerrold Nadler (D, NY) said he was voting no. Rep. John Larson (D, Conn.), who leads the Democratic caucus, said he didn't know how he would vote. Rep. Eliot Engel (D, NY) said he was leaning toward voting non as well.
  Rep. Lynn Woolsey (D., Calif.) complained that Democrats "gave too much away" and agreed to a deal that requires the fight over spending to continue later this year. "There's no revenue. It's all cuts," Ms. Woolsey said. "The very idea that they would fight over defense, that was the bottom line for me."


• • 1:22 pm
  • Battle on the Right
  • by Joseph B. White
  • Add a Comment
  Who’s got more pull: small government conservative groups such as the Club for Growth or the Big Business lobby? Watch the Republican votes on the debt deal and you’ll have part of an answer.
  Club for Growth vice president of government affairs Andrew Roth is telling lawmakers today that the organization “strongly opposes” debt deal, and will put a black mark next to the name of any member of Congress who supports it in the Club for Growth’s 2011 Congressional Scorecard. The C4G joins the Heritage Foundation’s Heritage Action in calling for no votes. See release.
  The U.S. Chamber of Commerce, as the U.S. Debt Battle Live Blog reported, has told lawmakers that they must vote YES on the debt deal or they will get marked down in the Chamber’s annual legislative scorecard, which influences campaign support from the capital’s biggest and most politically active business group.
  The tug of war among groups that normally support Republicans is mirrored on the left, where MoveOn.org and other opponents of cuts to government social programs are deriding the debt deal as a sellout to the tea party.


• • 1:25 pm
  • MoveOn Joins Liberal Backlash Against the Debt Deal
  • by Danny Yadron
  • Add a Comment
  The liberal backlash continues against the debt-ceiling deal made Sunday between the White House and congressional leadership.
  Justin Ruben, executive director of MoveOn.org called the compromise legislation a “bad deal” given the country’s fragile economic recovery.
  “This is a bad deal for our fragile economic recovery, a bad deal for the middle class and a bad deal for tackling our real long-term budget problems,” Mr. Ruben said in a written statement. “It forces deep cuts to important programs that protect the middle class, but asks nothing of big corporations and millionaires. And though it does not require cuts to Medicare, Social Security and Medicaid benefits, it opens the door for these down the road via an unaccountable Congressional committee.”
  He added that he supported a clean debt-ceiling bill, a nonstarter with congressional Republicans and some Democrats.
  MoveOn was a major force in the 2006 and 2008 elections that propelled Democrats to control of Congress and then-Sen. Barack Obama to the White House.


• • 1:46 pm
  • Where's the Love From Russia?
  • by Richard Boudreaux and Ira Iosebashvili
  • Add a Comment
  Russian Prime Minister Vladimir Putin welcomed what he called a common sense deal allowing the United States to avoid a default but said America’s huge debt is “a parasite” that still threatens the global financial system.
  In a speech Monday, Mr. Putin said Russia and other countries should seek new reserve currencies to hedge against “a systemic malfunction” in the United States. Russia keeps almost half its reserves in dollar assets.
  The Russian leader has previously criticized the U.S. propensity to cover budget deficits with treasury bills and bonds held by countries such as China and Russia. His remarks reflected apprehension in other capitals over weeks of political wrangling in Washington and its potential damage to an already fragile global economic recovery.
  “The country is living in debt,” Mr. Putin told a pro-Kremlin youth rally in central Russia. “It is not living within its means, shifting the weight of responsibility on other countries and in a way acting as a parasite.”
  The deal announced Sunday by U.S. President Barack Obama was a relief, Mr. Putin added, “but it simply delayed a more systemic solution.”
  Uncertainties about the U.S. economy have already pushed Russia to seek alternatives such as gold and other sovereign debt. Russia curtailed its purchase of Treasuries in the past year, down from $176 billion last October to $125 billion in April, according to U.S. Treasury Department data.
  Mr. Putin’s remarks Monday indicated the Kremlin will cut back further.
  Sergei Guriev, rector of Moscow’s New Economic School and an adviser to President Dmitry Medvedev, said he is recommending that Russia pursue a deal with China so that Russia can hold Chinese debt.
  Many Russian officials see the trouble in Washington as more political than economic. Although Russia’s state-controlled television often portrays American political life as deeply chaotic and dysfunctional, officials in Moscow still believe the U.S. economy is a safer bet than most others in the world.
  “The euro is not in great shape either,” Mr. Guriev said.


• • 1:49 pm
  • House Could Vote Tonight, Lawmaker Says
  • by Corey Boles
  • Add a Comment
  A senior House Republican says his chamber could vote on the debt ceiling bill by 6 p.m. today. “If all goes well we will be out of here by 6 p.m.,” said Rep. Lamar Smith, (R., Texas) chairman of the House Judiciary Committee. Mr. Smith said he would support the legislation and believed a majority of House Republicans would vote in favor of it, although some conservative Republicans and some liberal Democrats have indicated during the day they oppose the deal.
  It’s still not clear when the Senate will vote.


• • 2:17 pm
  • House Whip Count
  • Add a Comment
  The Hill is keeping a whip count of yeas, nays and undecided votes on the debt-ceiling bill in the House.


• • 2:19 pm
  • Pelosi to House Democrats: Vote Your Conscience
  • by Siobhan Hughes
  • Add a Comment
  House Minority Leader Nancy Pelosi (D., Calif.) told members of her caucus to vote their conscience on the debt and deficit cutting bill endorsed by President Barack Obama, effectively signaling she won’t press them to vote yes, lawmakers said after a Democratic caucus meeting.
  Rep. G.K. Butterfield, (D., N.C.) said Ms. Pelosi reminded her caucus of the consequences of a federal default, which could follow if Congress doesn’t act to lift the debt ceiling by tomorrow. Mr. Butterfield said he himself is leaning toward a no vote.
  Meanwhile, House Speaker John Boehner has delayed a planned statement after a meeting with members of the House Republican caucus.


• • 2:32 pm
  • U.S. Debt Drama Enhances Cantor's Clout
  • by Gerald F. Seib
  • Add a Comment
  Technically, the final deal to raise the government's debt ceiling was hammered out over the weekend by the leaders of the Senate, working with President Barack Obama and his White House.
  But the agreement bears the unmistakable fingerprints of Republican Rep. Eric Cantor, the House Majority Leader. In an ugly, agonizing, months-long deficit drama in which nobody comes away looking particularly good, Rep. Cantor emerges as the capital character who probably did the most to enhance his influence.
  Read the rest of Gerald F. Seib's Capital Journal column here.


• • 2:40 pm
  • Biden: If Debt Deal Passes, We Can Talk About Jobs
  • by Joseph B. White
  • Add a Comment
  Vice President Joe Biden emerged from his efforts to sell Democrats on the debt and deficit deal and said the sooner the legislation is passed, the sooner the administration will be able to talk about jobs. One of the complaints, and there are many, from rank and file Democratic lawmakers is that the debt ceiling clash has shoved the jobs issue off Washington’s agenda in favor of the Republicans’ No. 1 issue: spending cuts and the debt.
  Mr. Biden said passing the debt ceiling deal is the best way to change that.  The agreement, he said,  “has one overwhelming, redeeming feature. It says the debt issue can’t come up [again] until 2013. This has nothing to do with elections. The moment this passes we will be talking about jobs.”
  Republicans say the White House insistence on taking the debt ceiling issue off the table through 2012 has everything to do with politics.


• • 2:48 pm
  • Investors Still Have Reason to Worry
  • by Ian Salisbury
  • Add a Comment
  Assuming Congress resolves the debt impasse today, investors will face a new worry: What cuts imposed by the deal mean for their stock portfolios.
  The debt-ceiling pact awaiting congressional approval provides for spending cuts of about $900 billion over the next decade while promising to find additional ways to reduce the deficit by another $1.5 trillion. One worry is that the deal leaves plenty of uncertainty by putting off tough decisions on programs like Medicare and Social Security. A second, perhaps larger concern, is that zeal to eliminate the deficit could lead the government to cut spending too quickly in a weak economy.
  That fear was amplified by economic data released Monday showing growth in the manufacturing sector slowed during July and by worries that ratings firms could still downgrade U.S. debt. The Dow Jones Industrial Average was down 105 points, or 0.9%, to 12038, in recent Monday afternoon trading.
  "With the current state of the economy, to have the government pull out too quickly would be a mistake," said Stephen Wood, chief market strategist at Russell Investments, echoing a sentiment expressed by others. Mr. Wood said he was nonetheless encouraged by news that cuts would be phased in over 10 years. "I think that would be wise," he said.


• • 3:29 pm
  • Putin Assails U.S. Over Debt
  • by Richard Boudreaux
  • Add a Comment
  MOSCOW—Russian Prime Minister Vladimir Putin welcomed what he called a common-sense deal allowing the U.S. to avoid a default but said America's huge debt is "a parasite" that threatens the global financial system.
  In a speech Monday, Mr. Putin said Russia and other countries should seek new reserve currencies to hedge against "a systemic malfunction" in the U.S. Russia keeps almost half its reserves in dollar assets. Both Russia and China in the past have questioned the dollar's pre-eminence as a reserve currency and its role in international trade and investment.
  Read the rest of the article here.


• • 3:36 pm
  • Carney Joins Reporters Marking Time Until a Vote
  • by Joseph B. White
  • Add a Comment
  White House spokesman Jay Carney briefed the press a short while ago, as Washington marks time waiting for Congress to vote on the pending debt ceiling deal. Below, a few excerpts from Mr. Carney’s colloquy with reporters.
  On the Republican view that the deal is structured so that it will be hard for the special congressional deficit committee to recommend a tax increase:
  “The suggestion that it is impossible for the joint committee to raise tax revenue is simply not accurate; it’s false.  If the joint committee decides, for example, that part of a balanced deal should be to eliminate tax subsidies for oil and gas companies or corporate jets, or if they decide to limit the value of itemized deductions for high-income earners as the President has called for, they can do that and they would raise revenue through doing that.
  “Second, nothing in the legislation that’s being considered by Congress specifies at all that the committee operate under any specific baseline.  Any suggestion otherwise is simply false.”
  On the fallout from the debt ceiling fight:
  “This was a mess.  There is no question.  It was a circus at times.  We unnecessarily sent the message around the country and the globe that the United States might in fact default on its obligations for the first time in its history.  But in the end, compromise won out, and an agreement that we believe strongly is in the interest of the American people was achieved.”
  On whether there will be a signing ceremony for the debt bill, if it passes:
  “I don’t have any announcement or scheduling announcements to make on that.”


• • 3:59 pm
  • House Leaders Pitch the Debt Deal
  • by Joseph B. White
  • Add a Comment
  House leaders are speaking now on the debt deal, going public with their pitches for House Republicans to support the plan.
  Addressing conservatives who are disappointed the deal doesn’t demand passage of a balanced budget amendment to the Constitution, House Speaker John Boehner (R., Ohio,) said:
  “It gives us the best shot in the 20 years I have been here to build support for a balanced budget amendment to the Constitution to put the fiscal handcuffs on this Congress that are sorely needed.”
  House Majority Whip Rep. Kevin McCarthy (R., Calif.): “What a difference one year makes.”
  Republican conference chairman Rep. Jeb Hensarling, (R., Texas,): “For the first time in my life, government discretionary spending will go down for the first time in my life… I look forward to taking that debate, on the balanced budget amendment, to the American people..”
  Budget Committee Chairman Rep. Paul Ryan (R., Wisc.): “We couldn’t get caps on spending the last time Republicans in the majority. We got that.”
  Mr. Boehner again, asked about Minority Leader Nancy Pelosi’s position that it’s up to the GOP to bring the votes to pass the deal: “This is an agreement between the bipartisan leaders of Congress and the President of the United States. All of the leaders” have an obligation to help get it passed.
  Asked about GOP lawmakers worried about defense cuts: “This is the best defense number we are going to get.”
  As Mr. Boehner walks out, a shouted question: “Do you have the votes?”
  No answer.


• • 4:10 pm
  • Boehner to Candidates: “I’ve Got a Big Job To Do"
  • by Danny Yadron
  • Add a Comment
  Speaker John Boehner declined Monday to comment directly on his party’s presidential candidates who have panned the debt-ceiling deal he and other congressional leaders struck with the White House. Then again, his opinion of their input wasn’t that hard to decode.
  “I’ve got a big job to do here,” Mr. Boehner said at a press conference on Capitol Hill. “Those running for president have their own aspirations… my goal is to get this bill passed.”


• • 4:16 pm
  • Dow Closes Down 11 Points
  • Add a Comment
  The Dow Jones Industrial Average closed down 11 points after vacillating throughout the day. Stocks started higher on news of a debt-ceiling deal, then slid after the ISM report showed that U.S. manufacturing activity declined in July. But an afternoon "Seinfeld" rally brought the Dow back to near-even.


• • 4:36 pm
  • House Holding Procedural Vote
  • Add a Comment
  The House is currently voting on the rules for its debate on the debt-ceiling bill. If the rules are approved, the House will debate for an hour before voting on the bill itself, likely around 7 p.m. ET. It's not clear when the Senate would take up the bill, if it passes the House.


• • 4:37 pm
  • Geithner Rallies Business Groups
  • by Victoria McGrane and Damian Paletta
  • Add a Comment
  As the clock ticks down to the final debt-deal votes in Congress, business groups are working to help ensure the plan passes, urged on by Treasury Secretary Timothy Geithner.
  Representatives from several powerful industry groups trooped over to the Treasury Department at 2 p.m. for a 30-minute meeting with Mr. Geithner and his deputy Neal Wolin.
  One person at the meeting said Mr. Geithner gave a “rah rah” speech, asking the groups to make one final push on Capitol Hill to get the legislation agreed to by both parties’ leaders passed. A Treasury official said Mr. Geithner “discussed the economic benefits and need for prompt Congressional enactment of the recent debt ceiling deal, which removes the cloud of uncertainty over our economy and instills global confidence by putting in place a framework for balanced long-term fiscal discipline.”
  The meeting included the U.S. Chamber of Commerce, the Financial Services Roundtable, the Financial Services Forum, the Business Roundtable, the American Insurance Association, the American Bankers Association, the National Retail Federation, the Securities Industry and Financial Markets Association, the American Council of Life Insurers and the National Association of Real Estate Investment Trusts.
  Many of these groups in recent weeks have been deploying various tactics to urge members to reach a deal on raising the debt-ceiling, and their lobbying continued today in the forms of letters to lawmakers and phone calls to some fence-sitters.
  Many of those at the Treasury meeting, for instance, signed on to a joint letter  trade association letter just sent up to the Hill urging passage of the legislation and noting the usual concerns about the negative consequences of a default on the country’s debts.
  Their recommendation carried one caveat though: “In making this recommendation, we remain extremely concerned about the level of the federal debt and large annual budget deficits and remain committed to working to address the nation's fiscal challenges,” the groups wrote.


• • 4:44 pm
  • House Progressive Caucus Trashes Debt Deal
  • by Siobhan Hughes
  • Add a Comment
  Members of the House Progressive Caucus said Monday they expect many of their liberal caucus to oppose the debt ceiling deal, underscoring the challenge House Speaker John Boehner will have getting the deal approved.
  The Progressive Caucus echoed other Democrats who say it’s up to Republicans to find votes for the debt package.
  "They won, and they should be able to deliver the votes that they need to pass what is essentially their package," Rep. Raul Grijalva (D, Ariz.), a co-chair of the caucus, said at a press conference.
  The Progressive caucus has 76 members, accounting for almost one-fifth of the seats in the House. Rep. Keith Ellison (D, Minn.) said that the caucus doesn't have a tally of  how many progressives will vote no but indicated that the opposition is substantial.
  "We feel this is not a compromise and as such we will stand in opposition to it," said Mr. Grijalva.


• • 4:49 pm
  • Protesters Arrested in House Gallery
  • by Kristina Peterson
  • Add a Comment
  U.S. Capitol police arrested 22 people in the visitors' gallery of the House of Representatives after their protests over the debt ceiling deal disrupted Monday debate on the House floor.
  The visitors shouted repeatedly from the visitors’ gallery in protest against corporate tax breaks, which weren’t eliminated as part of the debt-ceiling deal reached by Congressional leaders and President Barack Obama on Sunday.
  Capitol police officers made the arrests around 3:20 p.m. EDT and charged them with "disruption of Congress," according to U.S. Capitol Police Public Information Officer Kimberly Schneider.
  The protests interrupted debate on the floor, while the presiding officer called the police to remove the raucous visitors from the chamber.
  The House is expected to vote on the bill to raise the debt ceiling later Monday. The plan would raise the debt ceiling by $2.4 trillion in two stages while cutting spending by about $2.7 trillion over 10 years.


• • 4:56 pm
  • House Moves Toward Final Debt Deal Vote
  • by Corey Boles
  • Add a Comment
  The House just voted, 249-178, to clear the way for further debate and a final vote on the debt-ceiling deal. The largely party-line vote was a procedural test and doesn’t necessarily reflect what the margin on the final vote to pass the legislation will be. Meanwhile, the Senate is now expected to vote tomorrow on the $2.1 trillion debt ceiling package, a Democratic aide says. Senate Republican Leader Mitch McConnell also said the vote will come Tuesday in comments to CNBC.


• • 5:00 pm
  • Pelosi Aide Says She Will Back Debt Deal
  • by Siobhan Hughes
  • Add a Comment
  House Minority Leader Nancy Pelosi will vote “yes” on the debt deal, an aide says. Ms. Pelosi earlier today told members of the House Democratic caucus they were free to vote their consciences on the $2.1 trillion deficit cutting package.  It’s possible that House Republican leaders will need some Democratic votes to win passage of the agreement. A vote is expected later this evening.


• • 5:43 pm
  • House Leaders Confident They Have the Votes
  • by Corey Boles and Joseph B. White
  • Add a Comment
  
  House Republican leaders believe they will get a majority of GOP lawmakers to support the debt ceiling bill, a leadership aide says, and are ready to move toward a final vote within the hour.  Republicans expect to need Democratic votes to pass the bill.
  Lawmakers are on the floor of the House now discussing the measure.
  House Minority Whip Steny Hoyer (D., Md.) said he’ll vote for the bill because “default for the United States of America is not an option.”
  House Rules Committee Chairman David Dreier (R., Calif.), leading the Republican side of the discussion, said: “Getting our fiscal house in order is a very, very important step” to helping people who need jobs. Mr. Dreier offered compliments and congratulations to President Barack Obama and House and Senate leaders for getting the deal done.


• • 6:08 pm
  • Counting the Votes
  • by Corey Boles
  • Add a Comment
  Here’s the math: There are 240 Republicans in the 435 member House. The debt plan needs 216 votes to clear the chamber, a number that reflects absent lawmakers. With at least 120 Republicans on board, no more than 96 of the 193 Democrats would have to support the measure in order for the bill to pass.
  The exact number of Republicans and Democrats planning to support the bill isn’t yet known,  but a senior Republican leadership aide said the debt ceiling legislation could come up for a final House vote before 7 p.m. EDT.
  House Minority Leader Nancy Pelosi (D., Calif.) and Minority Whip Steny Hoyer (D., Md.) plan to support the bill, which should ease the way for more Democrats support the legislation.
  If the House approves the plan, the Senate is expected to take it up on Tuesday, the final day before the federal government could run out of money to pay all of its bills.


• • 6:12 pm
  • A ‘Sword of Damocles’ over Defense?
  • by Nathan Hodge
  • Add a Comment
  Rep. Howard McKeon has been consistent in his opposition to sweeping new security spending cuts as part of a debt-reduction deal. But the California Republican, who heads the House Armed Services Committee, is reluctantly going along with the debt-ceiling compromise.
  “I will support this proposal with deep reservations,” he said in a statement issued late this afternoon.
  The debt deal now under consideration, Rep. McKeon said, “is the least bad proposal before us. What is clear is we have cut what we can from the Department of Defense, and given what’s at stake it is essential that the joint committee include strong national security voices.”
  Rep. McKeon did, however, express worry about additional cuts beyond $350 billion that the debt deal would initially cut from the Pentagon’s base operating budget. The deal includes a second tranche of automatic cuts that would be imposed if Congress refuses to enact changes proposed by a joint congressional committee.
  “There is no scenario in the second phase of this proposal that does not turn a debt crisis into a national security crisis,” he said. “Defense cannot sustain any additional cuts either from the joint committee or the sequestration trigger.”
  That part of the deal does not sit well with the defense industry, either. The Aerospace Industries Association, whose 147 full members include top defense manufacturers like Lockheed Martin Corp. and Boeing Co., issued a statement warning that the provision for automatic cuts “dangles a Sword of Damocles over our national security.”
  The association supported a debt-ceiling deal, amid worries that a default could interrupt payments to government contractors. But a potential $600 billion in additional cuts to defense, the association said, “could compromise our national security for decades to come …. [and] could leave our troops with old, worn-out equipment, diminished capability and vulnerable to threats from across the globe.”


• • 6:15 pm
  • Pelosi Makes Her Argument
  • by Joseph B. White
  • Add a Comment
  House Minority Leader Nancy Pelosi is on the House floor as Democrats move to wrap up their floor debate.


• • 6:28 pm
  • ‘Satan Sandwich’ of a Deal
  • by Rob Wells
  • Add a Comment
  Thanks to Rep. Emanuel Cleaver (D., Mo.), this debate has now yielded a new classic phrase in American political discourse: Sugar-Coated Satan Sandwich.
  Rep. Cleaver sent this message out on his Twitter feed, @repcleaver:  "This deal is a sugar-coated satan sandwich. If you lift the bun, you will not like what you see."


• • 6:33 pm
  • Obama Would Sign Debt Ceiling Bill
  • Add a Comment
  The White House just issued its formal statement saying President Barack Obama will sign the debt-ceiling bill.
  Here’s the full text:
  

  STATEMENT OF ADMINISTRATION POLICY
  S. 365 – Budget Control Act of 2011
  
  

  The Administration strongly supports enactment of the Budget Control Act of 2011.  It is imperative that the United States not default on the Nation’s obligations, that the full faith and credit of the United States be preserved, and that the Nation’s fiscal house be put in order.  The bill would increase the debt ceiling to a level that will be sufficient for the Nation to meet its obligations through the beginning of 2013, while providing both a significant down payment on deficit reduction and a means to reduce the deficit further through a balanced approach that allows both for cutting spending and for addressing revenues by eliminating tax subsidies or through comprehensive tax reform.  If the bill were presented to the President, he would sign it.



• • 6:36 pm
  • Pelosi: ‘Not One Red Cent’ From Wealthy
  • by Joseph B. White
  • Add a Comment
  House Minority Leader Nancy Pelosi just finished a speech explaining why she’ll vote for the debt ceiling bill, but anyone arriving in the middle could easily have mistaken her address for a declaration of opposition.
  “There is not one red cent coming from America’s familes…Not one red cent to help reduce the deficit while we are willing to cut Title 1 education for the poorest children in America,” she said.
  But the California Democrat said there were reasons why she will vote for the bill – including a mechanism that will cut defense spending at the same rate as other domestic programs if Congress fails to agree on a different formula.  The bill also spares Medicare beneficiaries from benefit cuts, she said.
  “It’s hard to believe we are putting our best foot forward with the legislation that comes before us today. I am not happy with it but I am proud of some of the accomplishments, which is why I am voting for it,” she said.
  Ms. Pelosi closed with a partisan flourish: “I hear our Republican colleagues say they got 98% of what they want in the bill. I hope their votes reflect that.”


• • 6:55 pm
  • House Starts Voting on Debt Bill
  • by Joseph B. White
  • Add a Comment
  The House of Representatives has started its final vote on the debt ceiling deal, or the Budget Control Act of 2011.
  Early count: 109 Republicans and 9 Democrats voting yes, 37 Republicans and 28 Democrats, no. The voting should be wrapped up shortly after 7 p.m. EDT


• • 7:01 pm
  • Debt Ceiling Bill Vote Heads Into Final Minutes
  • by Joseph B. White
  • Add a Comment
  
  With just over six minutes left on the official voting clock, the debt ceiling bill had 167 yes votes, still short of the 216 needed for passage.  From the vote tallies, it appears some Democrats were holding back, waiting to see how many Republicans voted for or against the measure.


• • 7:04 pm
  • Democrats Holding Back
  • by Joseph B. White
  • Add a Comment
  With just under four minutes left in the official voting, there are still 120 Democrats who haven’t voted on the debt ceiling.


• • 7:10 pm
  • Giffords Votes; Debt Bill Passes
  • by Joseph B. White
  • Add a Comment
  The House broke into sustained applause as Rep. Gabrielle Giffords voted for the bill. Ms. Giffords was gravely injured by a gunman who carried out a deadly shooting spree in January.
  
  The bill passes. Final count: 269-161.


• • 7:27 pm
  • Reid Announces Tuesday Vote
  • by Corey Boles
  • Add a Comment
  Senate Majority Leader Harry Reid announced that the Senate will vote Tuesday at noon on the debt bill.


• • 7:54 pm
  • How the House Voted
  • by Corey Boles
  • Add a Comment
  Here's how the House voted on the debt bill, according to the House clerk:
  174 Republicans voted yes while 66 voted no.
  Democrats split with 95 voting yes, 95 voting no, and three not voting.
  
  
  FINAL VOTE RESULTS FOR ROLL CALL 690
  (Republicans in roman; Democrats in italic; Independents underlined)
        S 365      RECORDED VOTE      1-Aug-2011      7:09 PM
        QUESTION:  On Passage
        BILL TITLE: To make a technical amendment to the Education Sciences Reform Act of 2002
  
  

  	Ayes	Noes	PRES	NV
  Republican	174	66
  Democratic	95	95		3
  Independent
  TOTALS	269	161		3

  
  
  ---- AYES    269 ---
  

  Adams Aderholt Alexander Altmire Andrews Austria Bachus Barletta Barrow Bartlett Barton (TX) Bass (CA) Bass (NH) Benishek Berg Berkley Berman Biggert Bilbray Bilirakis Bishop (GA) Bishop (NY) Black Blackburn Boehner Bonner Bono Mack Boren Boustany Brady (PA) Brady (TX) Buchanan Bucshon Burgess Calvert Camp Campbell Canseco Cantor Capito Capps Carnahan Carney Carter Cassidy Castor (FL) Chabot Chandler Cicilline Clay Clyburn Coble Coffman (CO) Cole Conaway Connolly (VA) Cooper Costa Costello Courtney Crawford Crenshaw Critz Cuellar Culberson Davis (CA) Davis (IL) Denham Dent Deutch Diaz-Balart Dicks Dingell Doggett Dold Donnelly (IN) Dreier Duffy Duncan (TN) Ellmers Emerson Eshoo Farenthold Fattah Fincher Fitzpatrick Flores Fortenberry Foxx Frelinghuysen

  Gallegly Garamendi Gardner Gerlach Gibbs Gibson Giffords Goodlatte Gosar Granger Graves (MO) Green, Gene Griffin (AR) Grimm Guinta Guthrie Gutierrez Hanabusa Hanna Harper Hastings (WA) Hayworth Heck Heinrich Hensarling Herger Herrera Beutler Higgins Himes Hinojosa Hirono Hochul Holden Hoyer Huizenga (MI) Hurt Inslee Israel Issa Jackson Lee (TX) Jenkins Johnson (GA) Johnson (OH) Johnson, E. B. Johnson, Sam Keating Kelly Kildee Kind King (NY) Kinzinger (IL) Kline Lance Langevin Lankford Larsen (WA) LaTourette Latta Levin Lewis (CA) Lipinski LoBiondo Long Lowey Lucas Luetkemeyer Lummis Lungren, Daniel E. Lynch Manzullo Marchant Marino Matheson McCarthy (CA) McCarthy (NY) McCaul McCotter McHenry McKeon McKinley McMorris Rodgers Meehan Meeks Mica Michaud Miller (FL) Miller (MI) Miller, Gary Murphy (PA) Myrick

  Noem Nugent Nunnelee Olson Owens Palazzo Pascrell Paulsen Pelosi Pence Perlmutter Peterson Petri Pitts Platts Polis Pompeo Price (GA) Quigley Rahall Reed Reichert Renacci Ribble Richmond Rigell Rivera Roe (TN) Rogers (AL) Rogers (KY) Rogers (MI) Rohrabacher Rooney Ros-Lehtinen Roskam Ross (AR) Rothman (NJ) Royce Runyan Ruppersberger Rush Ryan (WI) Sanchez, Loretta Schiff Schilling Schmidt Schock Schrader Schwartz Scott, David Sensenbrenner Sessions Sewell Sherman Shimkus Shuler Shuster Simpson Sires Smith (NE) Smith (NJ) Smith (TX) Speier Stivers Sullivan Terry Thompson (CA) Thompson (PA) Thornberry Tiberi Tsongas Upton Van Hollen Walberg Walden Walz (MN) Wasserman Schultz Webster West Whitfield Wilson (FL) Wittman Wolf Womack Woodall Wu Young (AK) Young (FL) Young (IN)

  
  ---- NOES    161 ---
  

  Ackerman Akin Amash Bachmann Baldwin Becerra Bishop (UT) Blumenauer Boswell Braley (IA) Brooks Broun (GA) Brown (FL) Buerkle Burton (IN) Butterfield Capuano Cardoza Carson (IN) Chaffetz Chu Clarke (MI) Clarke (NY) Cleaver Cohen Conyers Cravaack Crowley Cummings Davis (KY) DeFazio DeGette DeLauro DesJarlais Doyle Duncan (SC) Edwards Ellison Engel Farr Filner Flake Fleischmann Fleming Forbes Frank (MA) Franks (AZ) Fudge Garrett Gingrey (GA) Gohmert Gonzalez Gowdy Graves (GA)

  Green, Al Griffith (VA) Grijalva Hahn Hall Harris Hartzler Hastings (FL) Holt Honda Huelskamp Hultgren Hunter Jackson (IL) Johnson (IL) Jones Jordan Kaptur King (IA) Kingston Kissell Kucinich Labrador Lamborn Landry Larson (CT) Latham Lee (CA) Lewis (GA) Loebsack Lofgren, Zoe Luján Mack Maloney Markey Matsui McClintock McCollum McDermott McGovern McIntyre McNerney Miller (NC) Miller, George Moran Mulvaney Murphy (CT) Nadler Napolitano Neal Neugebauer Nunes Olver Pallone

  Pastor (AZ) Paul Payne Pearce Peters Pingree (ME) Poe (TX) Posey Price (NC) Quayle Rangel Rehberg Reyes Richardson Roby Rokita Ross (FL) Roybal-Allard Ryan (OH) Sánchez, Linda T. Sarbanes Scalise Schakowsky Schweikert Scott (SC) Scott (VA) Scott, Austin Serrano Slaughter Smith (WA) Southerland Stark Stearns Stutzman Sutton Thompson (MS) Tierney Tipton Tonko Towns Turner Velázquez Visclosky Walsh (IL) Waters Watt Waxman Welch Westmoreland Wilson (SC) Woolsey Yarmuth Yoder

  
  ---- NOT VOTING    3 ---
  

  Baca

  Hinchey

  Moore

  
  

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• • 8:22 pm
  • Sens. Toomey, Coats Say They'll Vote 'No'
  • by Kristina Peterson
  • Add a Comment
  Two more Republican senators said Monday that they did not plan to vote for a deal to raise the debt ceiling. Sen. Pat Toomey (R., Pa.) said the plans' deficit reductions did not dig deep enough and that future cuts might not materialize.
  "Unfortunately, the debt ceiling deal announced last night does nothing to deal with the path of our government’s unsustainable deficit spending," Mr. Toomey said in a statement late Tuesday.
  Another objection came from Sen. Dan Coats (R., Ind.) who said he had hoped to see a package of at least $4 trillion in spending reductions over 10 years.
  "Although this plan is a step in the right direction, I believe it falls significantly short of what is needed to address the severity of this financial crisis," he said in a statement.
  Still, none of the conservative Republican senators have said they will block the bill's expedited passage through the Senate on Tuesday.