With just about an hour to go before a government shutdown would have gone into effect last Friday night, Congressional leaders came to a bipartisan agreement to keep federal operations going. Within 13 hours, both Chambers of Congress had passed the deal, and President Obama signed the legislation. While the legislation offers only a seven-day extension, it will keep the government going while the details of a longer-term solution are finalized.

Overall, the agreement cuts $78.5 billion from the President's proposed budget for FY 2011 and cuts $37.7 billion in current spending. As part of the compromise, just under half of that amount, $17.8 billion, will come from cuts to mandatory spending. Both Republicans and Democrats are calling this agreement the single-largest cut in annual spending in American history.

According to Dan Pfeiffer, the White House Communications Director, the two sides agreed to cut $13 billion from funding for programs at the Departments of Labor, Education, and Health and Human Services, as well as more than $1 billion in a cut across non-defense agencies. He said there will be reductions to housing assistance programs and health care programs along with $8 billion in cuts to state and foreign Operations.

While Republicans had considered a Democratic refusal to defund National Public Radio and Planned Parenthood to be deal-breakers, Speaker of the House John Boehner (R-OH) eventually recognized that insisting on these cuts would make any deal impossible to reach. In addition, a Republican attempt to prohibit the Environmental Protection Agency from regulating greenhouse gas emissions and water also was dropped, but funding for a school voucher program for the District of Columbia school system was retained.

Meanwhile, Senate Democrats have agreed to schedule votes on major House Republican priorities, namely defunding Planned Parenthood, Title X and healthcare reform legislation. For the next six months, an existing ban on tax revenue going to fund abortions in Washington, D.C., will remain in effect. Among the negotiators were a senior presidential advisor, Rob Nabors, Barry Jackson, who is Speaker Boehner's Chief of Staff, and David Krone, who is Senate Majority Leader Harry Reid's (D-NV) Chief of Staff.

Some Approve, Some Oppose 'The Path to Prosperity'

In an op-ed pieced published Sunday in USA Today, Boehner praised the deal, calling it "an agreement on the largest spending cut in history to help begin to create a better environment for private-sector job growth," but said more needs to be done. He also commended Representative Paul Ryan (R-WI), chairman of the House Budget Committee, for his proposal "The Path to Prosperity." Boehner said the plan would reduce uncertainty over the budget, creating incentives for small business leaders to resume hiring.

Ryan's plan has not been without controversy, especially regarding its cuts to Medicare and Medicaid. Some Democrats, such as former Clinton advisor Paul Begala, believe Ryan's plan will be a political boon for Democrats in 2012. Republicans, on the other hand, believe the Ryan plan will cement the GOP as the party of fiscal responsibility and help to find favor with voters.

President Obama to Unveil Plan on Entitlements

President Obama, meanwhile, is expected to unveil his own plan to tackle long-term entitlement spending later this week. He is scheduled to deliver a speech Wednesday to address entitlements and the long-term deficit in Washington. According to senior advisor David Plouffe, the president will address Medicare and Medicaid spending with an eye on deficit reduction to promote those programs' secular viability moving forward.

Other expected components are rollbacks to tax cuts on Americans making over $250,000 and some form of Social Security reform. The administration also wants to make corporate tax reform a key part of its agenda for the rest of the year. It's unclear whether it will be part of the deficit-reduction proposal or will be released as a separate piece.