The deal they were discussing, this person said, resembled the bill that Mr. Boehner won approval for in the House on Friday more than it did the one that Mr. Reid had proposed.
It would immediately raise the debt ceiling by about $1 trillion, accompanied by a similar range of spending cuts, and set up a new bipartisan committee that would work to find deeper cuts in exchange for a second debt limit increase that would extend through the 2012 election.
A failure of the new committee to win enactment of its proposal could then set off automatic spending cuts across the board, including to entitlement programs.
Of course nothing fills the Village with joy like a bipartisan committee. (The Ghost of David Broder may arise just to write a column about this triumph of the sensible center over partisan politics). The Democratic leadership appears to be trying to sell this thing by claiming that automatic cuts in defense spending will “force” the committee to come up with something more palatable than the big cuts in Medicare and non-military discretionary spending which will also automatically take place next year.
Upate: The proposed deal may be slightly less horrible that it appeared at first glance, in that the Bipartisan Committee will consider tax increases as well as spending cuts. (That the automatic cuts in Medicare are framed as coming out of the provider side rather than from beneficiary payments is mostly a political fig leaf, given that direct cuts to providers will to a significant extent become indirect cuts to beneficiaries). I doubt the current Congress will actually go for any recommendation that includes real tax increases, and therefore the most likely outcome of this deal is that the automatic cuts will take place.
In sum this deal will probably result in fairly massive spending cuts and no revenue increases, at a time when the economy remains in a deep recession in all but the narrowest technical sense. That this is happening under a Democratic president and a Democratic Senate naturally raises the question of the extent to which the Democrats in general and Barack Obama in particular are getting rolled, and the extent to which this outcome reflects something close to the genuine policy preferences of large swathes of the contemporary Democratic party.