So it looks like the debt crisis has been averted after the House approved the compromise earlier today by a comfortable margin (269-161).
On Tuesday it will be the Senate’s turn to vote.
So what are the details, particularly those that affect Medicare, Social Security and other issues that impact individuals employed by insurers, as well as agents, brokers, and consultants.
The Basics
The deal would keep the country out of default by reducing the federal deficit by at least $2.1 trillion over the next ten years.
Its unclear whether the deal might also result in a first-ever credit downgrade for the United States, since ratings agency Standard & Poor's indicated it was looking for a credible, bipartisan plan that had at least $4 trillion of debt reduction.
The plan includes no tax or entitlement reform measures up front, although theoretically it leaves the door open to both.
The framework of the negotiated compromise raises the debt ceiling immediately by $400 billion, then by another $500 billion after September 2011.
After deep cuts are enacted by the end of the year, ithe debt ceiling will be increased by another $1.2 trillion to $1.5 trillion.
The Specifics
The framework would immediately cap domestic and defense spending, resulting in cuts of $917 billion over 10 years. The framework then calls for more deficit reduction -- between $1.2 trillion and $1.5 trillion worth -- to be determined by the end of 2011 and imposed over 10 years.
Bipartisan debt-reduction committee: That second round of deficit reduction would be proposed by a special bipartisan joint committee of Congress. The committee has until late November 2011 to come up with its proposals and those proposals would be guaranteed by an up-or-down vote without amendment by Dec. 23.
If the committee proposes and the Congress approves between $1.2 trillion and $1.5 trillion in cuts, the debt ceiling will be increased dollar for dollar.
If the committee deadlocks or comes up with less than $1.2 trillion in cuts, or if Congress votes down the committee's proposals, the debt ceiling will be raised by $1.2 trillion.
While it appears the committee will be free to consider numerous avenues including entitlement and tax reform -- and even tax increases, practically speaking it's more likely members would hit an impasse again.
If the committee deadlocks or fails to come up with at least $1.2 trillion in debt reduction, the sword of Damocles will fall on most forms of spending in the federal budget.
Specifically, as much as $1.2 trillion in across-the-board cuts would kick in -- evenly divided between defense and non-defense spending.
Exempt from this round of cuts, however, would be programs that aid low-income Americans, according to Democrats' fact sheets, says CNN. These programs include Social Security, Medicaid, veterans' benefits and pensions, food stamps and Supplemental Security Income.
While Medicare would not be exempt, the framework would restrict cuts to no more than 2% of the program's cost. And the cuts that occur would not affect Medicare benefits nor would they increase seniors' costs, according White House sources.
