On July 31, 2011, Congressional leaders and the White House reached an agreement on legislation that raises the nation’s debt ceiling while cutting federal spending. Under the agreement, the spending cuts would be implemented in two steps. First, the would reduce discretionary (non-entitlement) spending by almost $1 trillion over 10 years. Second, a bipartisan committee would be tasked with identifying an additional $1.5 trillion in deficit reduction, which could include entitlement and tax provisions. The committee would be required to issue legislation by November 23, 2011, which would be considered under special “fast-track” parliamentary procedures requiring a Congressional vote by December 23, 2011. If legislation is not adopted to achieve deficit reduction targets, a budget enforcement mechanism would trigger spending reductions on January 1, 2013 – split 50/50 between domestic and defense spending. The “Bush Tax Cuts” will expire the same day, and the White House has stated that the President will veto any legislation to extend those tax cuts that doesn’t include a broad overhaul of the tax code. Medicare provider payments would be subject to reduction under the fall-back mechanism, subject to a 2% cap (although there appears to be no such limitation on the level of Medicare cuts that could be imposed under the bipartisan committee process).  The agreement is expected to be voted on later today, before the current debt ceiling is reached on August 2, 2011, although it is still unclear whether there are enough votes to assure passage.