The official Congressional Budget Office report on the debt ceiling deal has been release. From the CBO Summary:

  • Establish caps on discretionary spending through 2021;
  • Allow for certain amounts of additional spending for “program integrity” initiatives aimed at reducing the amount of improper benefit payments;
  • Make changes to the Pell Grant and student loan programs;
  • Require that the House of Representatives and the Senate vote on a joint resolution proposing a balanced budget amendment to the Constitution;
  • Establish a procedure to increase the debt limit by $400 billion initially and procedures that would allow the limit to be raised further in two additional steps, for a cumulative increase of between $2.1 trillion and $2.4 trillion;
  • Reinstate and modify certain budget process rules;
  • Create a Congressional Joint Select Committee on Deficit Reduction to propose further deficit reduction, with a stated goal of achieving at least $1.5 trillion in budgetary savings over 10 years; and
  • Establish automatic procedures for reducing spending by as much as $1.2 trillion if legislation originating with the new joint select committee does not achieve such savings.

If appropriations in the next 10 years are equal to the caps on discretionary spending and the maximum amount of funding is provided for the program integrity initiatives, CBO estimates that the legislation—apart from the provisions related to the joint select committee—would reduce budget deficits by $917 billion between 2012 and 2021. In addition, legislation originating with the joint select committee, or the automatic reductions in spending that would occur in the absence of such legislation, would reduce deficits by at least $1.2 trillion over the 10-year period. Therefore, the deficit reduction stemming from this legislation would total at least $2.1 trillion over the 2012–2021 period.

The important takeaway from the report: if Congress does nothing after passing this deal the CBO projects $2.1 trillion in deficit reduction. If the Super Congress does come up with a deal that can pass, it will produce $2.4 trillion in deficit reduction. The deal is written such that the debt ceiling will only be increased by as much as the deficit reductions that are realized.

There is a chance, if the economy slows, that a $2.1 trillion debt ceiling increase won’t be large enough to take us past the 2012 election. Even if this deal passes, we may see a repeat of this debt ceiling fight right in the middle of the election season.