Debt Deal Signed, Default Averted

Yesterday, President Obama signed the Budget Control Act, lifting the nation’s debt limit and avoiding a government default. The final law came after months of acrimonious negotiations and faced criticism from both parties. However, this issue is far from over — what happens over the next four months will have an enormous impact on America’s citizens and economy. (You can read AAUW’s explanation of the debt limit debate here.)

Here’s what you need to know:

• The legislation allows Obama to increase the debt limit by up to $400 billion immediately and requires that nearly $1 trillion in spending cuts be implemented over 10 years through caps on discretionary spending. This includes programs such as Head Start, K–12 education, family planning, job training, and services for the elderly. However, changes in student loan financing mean that the maximum Pell Grant award level will remain intact for at least the next two years.
• A bipartisan group of 12 lawmakers (six from the House, six from the Senate) will form the Joint Select Committee on Deficit Reduction (the so-called “Supercommittee”) to identify deficit reduction amounting to about $1.5 trillion. This committee can look at both spending cuts and increasing revenue, including possible further cuts to discretionary spending and cuts to entitlement programs, such as changing the way Social Security benefits are calculated.
• This committee must report its deficit-reduction proposals by November 23, and Congress must vote on the group’s package by December 23. Congress will not be able to amend the committee’s proposals.
• If the committee fails to come to an agreement or if Congress doesn’t pass the committee’s package, automatic across-the-board spending cuts worth about $1.2 trillion will begin in 2013 — with 50 percent coming from defense and 50 percent coming from domestic programs — in order to raise the debt ceiling by an equivalent amount. Key safety net programs such as food stamps, Social Security, and Medicaid will be exempt from cuts if this “trigger” is enacted.

During the debt ceiling negotiations, AAUW paid close attention to the status of our priorities — especially retirement security and education funding — and AAUW members kept the pressure on their legislators to protect important programs like Social Security. These are very tough budgetary times, but AAUW is guided by the principle that balancing the nation’s budget should not come on the backs of vulnerable Americans, including students, women, and working families. AAUW will continue to work to protect women’s opportunities and rights.