The debt will be increased in two phases. The first phase includes cutting $917 billion in spending over 10 years and it would raise the debt ceiling by $900 billion. These cuts are to be future spending caps but it is not clear which agencies will have their funding limited. Where the cuts are made will be up to Congress.
The second phase could increase the debt limit from $1.2 trillion to $1.5 trillion. The second phase would need to be triggered by one of three events:
- Congress passes a balanced-budget amendment to the Constitution.
- Congress passes broad deficit reform measures that are recommended by a newly created joint committee. This committee will be made up of 12 members of Congress and they have until Thanksgiving to cut up to $1.5 trillion from future deficits. Congress must vote on this plan by December 23.
- If neither of the above options happen the lack of action will trigger automatic cuts. These will be across the board cuts up to $1.2 trillion.
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