Debt ceiling deal is done, sort of, maybe

You were up late last night, right, waiting for Congress to reach a debt limit deal? Sure you were.

You were smart to go to bed on time.

Yes, there's a deal. And yes, the global stock markets (and my portfolio!) are glad the Republicans and Democrats decided to play sort of nice for a little while.

But there's still much left to do.

First, we need to know exactly what's in the bill.

The White House has posted a debt deal fact sheet on its website. But as is usually the case in political poker games, everyone is playing their cards very close to the vest.

The deal's framework is vague enough to allow each side hope it can get what it wants down the road. The nebulous nature of the information also should allow both sides some wiggle room as party leaders work to convince their members that they need to approve the deal and do so today.

While they hash that out, here are some highlights we do know about.

First, no taxes … yet. That's a big initial win for Republicans.

Second, no Social Security or Medicare cuts … yet. That's a big initial win for Democrats.

As for the dollars, the agreement is said to reduce federal spending by more than $2 trillion over the next 10 years.

It also will increase the United States' borrowing cap, now at $14.3 trillion, by another $2.4 trillion. That's a big enough debt ceiling to keep the government running through the 2012 elections.

Around $400 billion of that increase will be available immediately upon passage of the measure. That should mean that that Social Security benefits will be paid on schedule this week.

Another infusion of funds, around $500 billion that President Obama could order unless specifically denied by Congress, would be matched by savings achieved over the next decade from spending caps on federal agency budgets that Congress must approve each year.

As for the rest of the savings, a special bipartisan committee with members from both the House and Senate would be in charge of finding another $1.5 trillion in further spending cuts. This is where things get tricky and sticky.

The cuts are to be from entitlement programs -- for example, farm subsidies, Medicare and the Medicaid health care program for the poor and disabled -- and tax reform.

Ah fun. The general directive to come up with some type of tax reform is where we get to debate yet again what constitutes a tax increase.

These additional cuts and tax code changes are to be in some legislative form by Nov. 23, with a Congressional vote on the measure by Dec. 23. Note to Capitol Hill staff: Don't make any holiday plans.

And if Washington, D.C., just can't agree on ways to cut the deficit, in 2013 automatic spending cuts would kick in.

Social Security, Medicaid and food stamps, and veterans, civil and military pay would be exempt from this trigger. Medicare, however, would be cut.

The good news for those who use the health care program is that they would not be directly affected. Instead, according to those on Capitol Hill willing to leak a little information, health care providers and insurance companies would see a reduction in payments.

The trigger delay until 2013 has two purposes say those who worked out the deal.

First, it would push cuts far enough into the future to avoid any immediate contraction that could harm the sputtering recovery.

Second, it would push cuts past the 2012 election to avoid harm to the campaigns of sputtering politicians.

And oh yeah, both the House and the Senate will have to vote on a balanced-budget amendment between Oct. 1 and the end of the year.

Yep, it's going to be a fun run to the end of 2011 for this Congress and us taxpayers.

Related posts:

• Debt ceiling money (and tax) moves
• Waiting for the debt ceiling hurricane
• What's wrong with the Democrats when it comes to budget negotiations?
• GOP needs to learn how to declare victory

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