Obama Announces Deal Reached On Debt Limit Crisis

President Obama says a deal has been reached on a new United States debt level and averted a debt crisis that "would have had a devastating effect on our economy."

He said there were still some very important votes to be taken by members of Congress, but he wanted to announce that the leaders of both parties, in both chambers, have reached an agreement that would reduce the deficit and avoid default.

The first part of the agreement will cut about $1 trillion in spending over the next 10 years -- cuts that both parties had agreed to early on in this process.

"The result would be the lowest level of annual domestic spending since Dwight Eisenhower was President -- but at a level that still allows us to make job-creating investments in things like education and research. We also made sure that these cuts wouldn’t happen so abruptly that they’d be a drag on a fragile economy," said President Obama.

The second part of the agreement establishes a bipartisan committee of Congress to report back by November with a proposal to further reduce the deficit, which will then be put before the entire Congress for an up or down vote.

"In this stage, everything will be on the table. To hold us all accountable for making these reforms, tough cuts that both parties would find objectionable would automatically go into effect if we don’t act. And over the next few months, I’ll continue to make a detailed case to these lawmakers about why I believe a balanced approach is necessary to finish the job."

President Obama said it was not the deal he would have preferred. "But this compromise does make a serious down payment on the deficit reduction we need, and gives each party a strong incentive to get a balanced plan done before the end of the year," he said.

"Most importantly, it will allow us to avoid default and end the crisis that Washington imposed on the rest of America. It ensures also that we will not face this same kind of crisis again in six months, or eight months, or 12 months. And it will begin to lift the cloud of debt and the cloud of uncertainty that hangs over our economy.

"Now, this process has been messy; it’s taken far too long. I've been concerned about the impact that it has had on business confidence and consumer confidence and the economy as a whole over the last month. Nevertheless, ultimately, the leaders of both parties have found their way toward compromise. And I want to thank them for that," he said.

Members of both parties have yet to vote on the deal.

(C) Newsroom America 2011