Obama Announces Deal to Raise Debt Ceiling

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U.S. President Barack Obama has announced an agreement with congressional leaders on a compromise deal to raise the nation's debt ceiling and keep the government from defaulting on its $14.3 trillion debt.

Mr. Obama told reporters at the White House Sunday night the proposed deal cuts $1 trillion in spending over 10 years and sets up a bipartisan panel in Congress to look at making substantial additional reductions. He said that panel will consider all options, including tax increases and cuts to social welfare programs like Medicare.

Both the House and Senate still must approve the compromise. No votes are expected in either house of Congress until Monday at the earliest, to give rank-and-file lawmakers a chance to review the package. Congressional leaders of both parties think they have the votes to get the compromised approved.

The president called the proposed deal a compromise that lets the country avoid default while making a serious down payment on deficit reduction. He said default would have a "devastating effect" on the U.S. economy.

As congressional leaders argued over the debt crisis last week, U.S. stock markets suffered their worst losses of the year and the value of the dollar slumped.

All sides agreed on the need to cut spending and raise the debt ceiling. But they have squabbled for weeks on what to cut and how fast those cuts should be made.