President and Republicans Reach Debt Deal

President Barack Obama announced an agreement Sunday night with Republican congressional leaders on a compromise to avoid the nation's first-ever financial default. The deal would cut more than $2 trillion from federal spending over a decade. While the President and Republican leaders have reached an agreement, the package still needs to be passed in Congress.

Default "would have had a devastating effect on our economy," Obama said at the White House, relaying the news to the American people and financial markets around the world. He thanked the leaders of both parties.

House Speaker John Boehner telephoned Obama at mid-evening to say the agreement had been struck, officials said.

No votes were expected in either house of Congress until Monday at the earliest, to give rank-and-file lawmakers time to review the package.

But leaders in both parties were already beginning the work of rounding up votes.

In a conference call with his rank and file, Boehner said the agreement "isn't the greatest deal in the world, but it shows how much we've changed the terms of the debate in this town."

Obama underscored that point. He said that, if enacted, the agreement would mean "the lowest level of domestic spending since Dwight Eisenhower was president" more than a half century ago.

Senate Democratic leader Harry Reid provided the first word of the agreement.

"Sometimes it seems our two sides disagree on almost everything," he said. "But in the end, reasonable people were able to agree on this: The United States could not take the chance of defaulting on our debt, risking a United States financial collapse and a world-wide depression."

The Speaker has sent out this document to members outlining the proposed deal.

The deal includes no tax hikes, with spending cuts that exceed the amount of the increased debt authority. According to the Speaker's outline the deal would cut and cap discretionary spending immediately saving $917 Billion over 10 years. The framework requires both House and Senate to vote on a Balanced Budget Amendment after Oct. 1, 2011 but before the end of the year.

The framework creates a 12-member Joint Committee required to report legislation by November 23,2011 that would produce a proposal to reduce the deficit by at least $1.5 Trillion over 10 years. Each chamber would consider the Joint Committee proposal on an up-or-down basis without any amendments by December 23,2011. If Joint Committee's proposal is enacted or if a Balanced Budget Amendment is sent to the states, the President would be authorized to request a debt limit increase of $1.5 trillion.

The Associated Press contributed to this article.