Party Leaders OK Debt Deal

The Senate's Democratic and Republican leaders threw their support behind a debt compromise that will save the country from default.

08.01.11 12:52 AM ET

President Barack Obama announced Sunday night that leaders of both parties in Congress have struck a deal to reduce spending and increase the nation's debt limit, bringing to "an end the crisis that Washington imposed on America."

Obama said the deal would impose $1 trillion in spending cuts immediately, spread over the next 10 years, and leave the work of finding up to $2 trillion more to a bipartisan committee of Congress.

"In this stage, everything will be on the table" including entitlement reforms and tax increases, Obama said.

The announcement ended a tense weekend of negotiation between the White House and Congress as the deadline for defaulting on America's debt neared on Tuesday.

The leaders of the two parties in the Senate gave their blessings Sunday night to a hard-won compromise that will keep the United States from defaulting on its bills on Tuesday.

"This nation and this Congress are moving forward, and we’re moving forward together," Senate Majority Leader Harry Reid said on the Senate floor. He said leaders from both parties would present the plan to their members on Monday.

"Both parties gave more than they wanted to," Reid said. He said, "That is the essence of compromise. The American people demanded compromise this week and they got it."

Senate Republican Leader Mitch McConnell called it "an important moment" for the country. "There is now a framework to review that will ensure significant cuts in Washington spending," he said. Furthermore, he added, "The United States of America will not for the first time in our history default on its obligations."