Washington—Senator Dianne Feinstein (D-Calif.) made the following statement on Congressional negotiations to cut the deficit and prevent a default on America’s financial obligations:

“Day-by-day our country moves closer to defaulting on our sovereign debt—something that has never happened in the history of our country.  The repercussions of this protracted and public debate on whether our government will honor its financial obligations are already evident.

“Failure to raise the debt ceiling will jeopardize our credit rating, increase interest rates on all American families, and would have catastrophic consequences for more than 15 million Californians who rely on Social Security, Medicare and veterans benefits.

“The proposal introduced by Majority Leader Harry Reid is a sensible proposal that significantly reduces federal spending over the next 10 years and establishes a mechanism to achieve long-term deficit reduction. 

“I believe the Reid plan can attract bipartisan support in the Senate.  I’m hopeful House Republicans will abandon their ‘my way or the highway’ approach, join us to pass the Reid proposal and move our country beyond this debt limit debate that has taken our country to the edge of economic catastrophe.”

Senate Majority Leader Harry Reid Proposal

According to the Congressional Budget Office, Senator Reid’s proposal reduces federal spending by $2.4 trillion during the next 10 years. 

Specifically, the spending reductions are achieved by:

• $930 billion in discretionary Spending Cuts (defense and non-defense)
• $1 trillion in ending the wars in Iraq/Afghanistan
• $29 billion in mandatory savings (reducing health care fraud and certain subsidies)
• $43 billion in increased tax compliance
• $421 billion savings on interest on the debt
• $2.4 trillion TOTAL

Bipartisan Deficit Committee   

The Reid proposal would form a 12-member committee to fast track recommendations for deficit reduction. The committee would be directed to consider other bipartisan plans, such as the Gang of Six. No conditions are made regarding the extent of bipartisan support, such as number of cosponsors. The committee can only report one set of recommendations. Seven votes are required to approve recommendations. Recommendations are not amendable and subject to majority vote thresholds in both chambers.

Debt Ceiling        

The Reid proposal requires President Obama to request two further increases in the debt ceiling through 2012.  Requests to increase the debt ceiling are subject to a joint resolution of disapproval of Congress.

The full Reid debt limit proposal is available here.