McConnell: $3 Trillion Debt Deal in the Works

Updated at 6:3e0 a.m. edt

Democrats and Republicans yesterday agreed to a $1 trillion deal for starters to settle the debt crisis that threatened to tank the global economy.

The Congress and White House are expected to vote today for the deal that will raise the $14.3 trillion federal debt limit.

Updated at 3:30 p.m. edt

The Senate killed a Democratic debt reduction bill on a procedural vote this afternoon, but do-or-die talks jump-started overnight has leaders on both sides cautiously optimistic a deal can get done to avoid a default by a Tuesday deadline.

A 50-49 vote failed to end a GOP filibuster, as Democrats fell 10 votes short of the 60 needed to move Senate Democratic Harry Reid's bill to a final vote. It was seen mostly as a symbolic vote, since it was expected to fail.

All hope of beating the clock and raising the $14.3 trillion debt limit comes down to $3 trillion in spending cuts being negotiated by Senate GOP leader Mitch McConnell and President Obama.

"Despite all the reporting, no deal has been reached, there are still (important) issues to work out, and a lot of bad info is floating out there," White House Communications Director Dan Pfeiffer said in an early afternoon Twitter dispatch.

Democratic leaders from both chambers huddled in House Democratic leader Nancy Pelosi's office to plot their strategy. Outside that session Reid told reporters, deal is "a lot closer than yesterday but we still have a ways to go."

Some House Democrats were concerned that Obama would give away too much in his negotiations, and then ask them to help pass a lousy deal. "We've carried his water before, but sooner or later we'll drop the bucket if he keeps playing us like a patsy," said a senior House Democratic staffer.

Some Demnocreats are still miffed at Obama for deciding against letting the Bush-era tax cuts for the wealthiest Americans expire in the budget negotiations last December, arguing that it would help spur the economy by continuing to give the richest Americans a free ride. Those Democrats note the economy is worse now than it was then.

On the morning talks shows, McConnell explained the framework of a deal would include two waves of spending cuts, but would avoid a messy vote and replay of this ordeal over the holidays, as House Speaker John Boehner had wanted. 

The first wave of cuts would include $1 trillion in set-in-stone reductions to discretionary spending, but a bipartisan "super congressional committee" would need to determine the second round of cuts by Thanksgiving of 2012.

There would be automatic "trigger" with cuts to the Pentagon and entitlements if Congress does not act on the super committee's recommendations.

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With a Tuesday deadline looming, Democratic and Republican negotiators made strides overnight on a potential $3 trillion debt-reduction deal, Senate GOP leader Mitch McConnell said this morning.

"We're very close," McConnell said on CNN's "State of the Union" program, predicting a deal could be reached "soon."

The framework includes cuts in discretionary spending and caps on spending increases over 10 years, McConnell said. It calls for creation of a bipartisan debt-cuttting committtee made up of lawmakers, and includes a provision agreeing to a separate vote on creating a balanced-budget amendment to the constitution, he said.

The White House has said a deal must scrap the House GOP plan that calls for another debt debate and a vote in six months. "We're working on the accommodations that will get us there," McConnell said.

Sen. Chuck Schumer (D-N.Y.), the No. 3 Democrat in the Senate, cautioned that there is no deal as of yet, but he is very optimistic that the U.S. will not for the first-time ever default on its loan payments.

An apparent breakthrough came after Senate Democratic leader Harry Reid agreed to delay a 1 a.m. edt vote on his debt-reduction resolution in order to give negotiators time to see if they could move their talks forward. Reid rescheduled the vote for 1 p.m. today, but if a deal is close he may be persuaded to back up the vote again and amend or replace his legislation.

The hard part may come after a deal is reached. Even if the leaders have an agreement they still have to sell it to their rank and file, including the obstructionist Tea Party faction and contentious House liberals.

Egypt Tries To Calm Israeli Fears

Updated at 4:15 p.m. est

Assuring Israel that nothing has changed since the historic 1979 Camp David Accords was the first public act of engaging in foreign policy by the military government in Egypt.

“The Arab Republic of Egypt is committed to all regional and international obligations and treaties,” a senior military officer said in a statement read this morning on state-owned television.

UPDATE: President Obama welcomed the statement in conversations today with the leaders of Britain, Jordan and Turkey.

"The President welcomed the historic change that has been made by the Egyptian people, and reaffirmed his admiration for their efforts. He also welcomed the Supreme Council of the Armed Forces’ announcement today that it is committed to a democratic civilian transition, and will stand by Egypt’s international obligations," the White House said in a statement.

"The President emphasized his conviction that democracy will bring more – not less – stability to the region.  He also stressed the U.S. commitment to provide the support that is necessary and requested by the Egyptian people to pursue a credible and orderly transition to democracy, including by working with international partners to provide financial support," the statement added.

Egypt's initial statement  was meant to ease concerns aired publicly by the leaders of Israel, the oldest Democracy in the Middle East, as well as its backers in the United States, who quickly took to the airwaves and issued press releases adorned with fears that Egyptian democracy was a blight on the Jewish state next door.

Israeli Prime Minister Benjamin Netanyahu, who has publicly warned that one of the scenarios under the Egyptian Revolution could be the emergence of another Iran-like Islamic state, welcomed the statement from the military government.

"The longstanding peace treaty between Israel and Egypt has greatly contributed to both countries and is the cornerstone for peace and stability in the entire Middle East," the Israeli leader said in a written statement.