Lawmakers Agree on Debt Limit Legislation
After a nasty political battle, on Monday, August 1, 2011, lawmakers reached an agreement on debt limit legislation, known as the Budget Control Act of 2011 (Debt Bill). Current provisions of the Bill include no revenue raisers or tax changes. The House approved bipartisan legislation to raise the $14.3 trillion debt ceiling by $400 billion currently and reduce long-term budget deficits. President Obama signed off on the Bill on August 2.
The final, bitterly disputed, vote in the House was 269-161 and 74-26 in the Senate. The plan, which involved deep negotiations, would raise the federal debt limit in two stages by over $2 trillion. The plan also calls for cuts in government spending to be phased in over the next decade. Thousands of programs face huge cuts. However, no benefits will be cut from the Social Security or Medicare programs.
Any tax increases are also off the table as lawmakers in both parties oppose either the repeal of most tax expenditures or other tax law changes.
Both sides of the bitter argument complained of flaws in the final agreement which also would create a joint congressional committee responsible for finding additional savings, including a demand that any increase in borrowing be matched by spending cuts. The cuts are likely to come from agencies and such programs as federal retirement benefits, farm subsidies, student loans and grants, Medicaid and Pentagon spending.
Your Marcum LLP tax advisors will continue to keep you updated on future changes to Budget Legislation.
For the full text of the Budget Control Act of 2011, click here.