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July 22, 2011

Very Close to a Deal to Raise Debt Ceiling

President Obama and House Speaker John Boehner "are moving toward a deficit-reduction deal that could cut as much as $3 trillion in spending and overhaul the tax code by the end of next year to raise up to $1 trillion," the Wall Street Journal reports.

First Read: "But there are two big hurdles left: 1) on the substance, and 2) on soothing egos. On the substance, the most contentious matter is how you "trigger" the provisions to guarantee completing tax and entitlement reform. The Democrats have offered a trigger of letting the Bush tax cuts expire for those making $250,000 or more. Republicans, meanwhile, have countered that if those Bush tax cuts are hanging in the balance, they'd offer a trigger of their own to ensure Dem action: scaling back Obama's health-care law and eliminating the mandate. Bottom line: If entitlement and tax reform is completed on time, then the Bush tax cuts and the health-care law don't get touched."

"And that brings us to soothing egos. There would be two winners if this deal gets reached: President Obama and John Boehner. Obama gets his deal, avoids default, and advances his brand -- as the Washington Post's Fixers write -- of being able to bring people together when others have failed. Boehner gets his deal too, accomplishes something historic, and provides some stability for his House majority. But here's the deal: No one else wins."


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