Agreement Reached to Increase Debt Ceiling and Reduce Budget Deficit

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August 2, 2011

Last Sunday evening, President Obama addressed the nation to announce that an agreement had been reached to increase the debt ceiling and reduce the federal budget deficit.  The president noted that the agreement “will allow us to avoid default…[and] begin to lift the cloud of debt and the cloud of uncertainty that hangs over our economy.”  From the address:

Now, I’ve said from the beginning that the ultimate solution to our deficit problem must be balanced.  Despite what some Republicans have argued, I believe that we have to ask the wealthiest Americans and biggest corporations to pay their fair share by giving up tax breaks and special deductions.  Despite what some in my own party have argued, I believe that we need to make some modest adjustments to programs like Medicare to ensure that they’re still around for future generations.

The compromise President Obama was looking for appeared unlikely until Sunday evening.  Jackie Calmes and Jennifer Steinhauer, writing for the New York Times, report that Sunday’s “deal was forged over choices and Chinese food.”  They outline the series of phone calls and conversations that began on Friday night and continued for the next 48 hours.  Calmes and Steinhauer wrote:

In between… was a weekend of nonstop horse-trading, from a windowless Capitol basement room to the Oval Office, over a deal to increase the $14.3 trillion debt ceiling and reduce future budget deficits. There were flashes of hope and heart-stopping moments when failure — and a government default on its bills — seemed inevitable.

Ultimately, after much negotiation and discussion, the two parties came to an agreement and President Obama announced the deal to the American public.

Over the past several weeks, the Understanding Fiscal Responsibility blog has been covering the debate about the federal debt ceiling and detailing different ways this topic could be discussed in high school classrooms.  Now that an agreement has been reached, teachers can use this topic as a case study on the role of compromise in the federal budgeting process.  The New York Times has several resources to help shape such a lesson, each explained below.

The first New York Times resource that would be beneficial to high school students is an outline of the debt plans that failed.  Beginning with the Biden Talks last June and continuing through the second Boehner plan in late July, this interactive website describes nine attempts to raise the federal debt limit and address the nation’s growing deficit.  It details each of the plans and explains the factors that contributed to their failure.

The second resource from the New York Times builds upon the first, but provides additional information about the plans proposed between July 21 and July 31.  This resource provides a detailed outline of the “11th-Hour Deal” that President Obama described in his address to the nation last Sunday night.  The plan is outlined in a graphic organizer that clearly explains each of the steps in the process.

The third New York Times resource that would be beneficial to high school students is a breakdown of votes across the political spectrum.  This resource shows Republican and Democratic votes on the House bill to increase the debt ceiling, and further divides each party into Freshman Republicans, Tea Party Candidates, Freshman Democrats, Blue Dog Democrats, etc.  Students could use this information in coordination with a US map showing the geography of the House vote to better understand how the vote broke down nationwide.

Teachers could use these three resources, along with articles citied in earlier Understanding Fiscal Responsibility blogs, to help students understand the debate about the federal debt ceiling.  As part of this lesson, students should better understand the role of compromise in democratic government and be able to articulate how those compromises shape the United States’ budget and fiscal policy.

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