Heidi Przybyla | Washington | July 31

Bloomberg - The White House and congressional Republicans have found the framework of an agreement to increase the nation’s debt ceiling that would raise borrowing authority through the next presidential election, a person familiar with the talks said late last night.

The tentative outlines of the accord include spending cuts of $1 trillion and creation of a special committee [this special committee? - seems so, according to WaPo and the National Journal] to recommend additional savings of up to $1.8 trillion. The new panel would have to act before the Thanksgiving congressional recess in late November or government programs including Defense and Medicare would face automatic, across-the-board cuts, the person said.

If the new committee fails, Congress must also send a balanced budget amendment to the states for ratification.

A Democrat official familiar with the talks cautioned that no final agreement has been reached among involved in talks.

The prospective agreement wouldn’t include increased net revenue, a sticking point for Republicans who’ve been adamant that any deal with tax increases couldn’t pass the Republican- run House.

New York Times, By Carl Hulse, July 30

WASHINGTON — New budget talks between top Congressional Republicans and President Obama made progress late Saturday, suddenly stirring optimism that a last-minute deal could be reached to avert a potential federal default that threatened significant economic and political consequences.

After a tense day of Congressional floor fights and angry exchanges, Senator Harry Reid, the majority leader, called off a planned showdown vote set for after midnight, but said he would convene the Senate at noon on Sunday for a vote an hour later. He said he wanted to give the new negotiations a chance to produce a plan to raise the federal debt limit in exchange for spending cuts and the creation of a new Congressional committee that would try to assemble a long-range deficit-cutting proposal.

“There are many elements to be finalized and there is still a distance to go before an arrangement can be completed,” said Mr. Reid, who just a few hours earlier had played down talk of any agreement. “But I believe we should give everyone as much room as possible to do their work.”

[...]

A Democratic official with knowledge of the talks said that Mr. McConnell called Mr. Biden early Saturday afternoon, the first conversation between the two men since Wednesday. The official said they talked at least four more times on Saturday as they tried to work out an agreement.

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.

[...]

At the White House and in talks in Congressional offices and corridors, most of the attention was focused on finding a way to define the precise conditions under which the president could get a second increase in the debt limit that would be needed early in 2012 under both Republican and Democratic proposals. Officials in both parties said another idea that had surfaced was to require a change in Social Security policy if the new committee deadlocked, providing an incentive for the new committee to act on its own.

Under the proposal that the Congressional Budget Office said could save more than $100 billion over 10 years, a different measure of inflation would be used to calculate the annual cost-of-living adjustment in Social Security benefits. Supporters say the alternative measure of inflation is more accurate because it reflects what happens when prices rise; advocates for the elderly say the proposal is a backdoor way of cutting benefits.