UPDATE 1: August 2, 2011

After weeks of tense negotiations among congressional leaders and the Obama administration regarding raising the nation's debt limit and reducing the deficit, the White House announced Sunday that a deal had been forged. The deal came two days before the August 2 deadline, which Treasury Secretary Timothy Geithner identified as the date the country would be unable to pay all of the country's bills unless the debt ceiling was raised.

Late Monday, the House of Representatives passed the "Budget Control Act of 2011" by a comfortable margin of 269-161. The vote had 174 Republicans voting for the measure, while 66 members opposing it. On the other side of the aisle, 95 Democrats voted in favor and 95 Democrats voted against the compromise. Three legislators did not vote (two seats are currently not occupied).

On Tuesday, the Senate ended the debt-ceiling drama hours before the deadline by passing the legislation 74-26. Democrats registered 45 votes in favor and seven votes against - including Bernard Sanders (I-VT), who caucuses with the Democrats. Only 28 Republicans supported the bill, and 19 opposed it. President Obama signed the bill into law on August 2.

The Budget Control Act of 2011 contains four major components that seek to forestall a credit default by the United States government and avoid a credit downgrade by the major rating firms such as Moody's and Standard & Poor's. Reports last week indicated that credit rating firms would consider downgrading the nation's credit rating from AAA to AA without significant deficit reduction and a substantial increase in the nation's debt limit.

Here are the highlights of the act.

• Immediate increase in the debt-ceiling limit. The legislation calls for a $400 billion increase in the nation's statutory debt limit, with input from the Department of the Treasury, to ensure the limit does not exceed $100 billion. The bill also allows for another $500 billion increase in the debt ceiling provided Congress does not pass a resolution opposing such an increase with a veto-proof majority. The total front-end increase of the debt ceiling adds up to $900 billion.
• Discretionary spending caps. The deficit package establishes discretionary spending limits found in legislation passed by the GOP-controlled House last Friday with a 218 vote majority. The cuts, totaling some $917 billion over 10 years, are an initial down payment on deficit reduction. However, the caps, about $1.05 trillion in fiscal year 2012 to $1.25 trillion in fiscal year 2021, are now split between "non-security" and "security" spending. The legislation defines the term "security category" as "discretionary appropriations associated with agency budgets for the Department of Defense, the Department of Veterans Affairs, the Department of Homeland Security, the National Nuclear Security Administration, the intelligence community management account and all budget accounts under international affairs."
• Creation of a super-committee. The act sets up a bipartisan panel that top leaders in each party will appoint to identify budget cuts that Congress is unable or unwilling to enact. Minority and majority leaders in each chamber will appoint three members to identify and recommend an additional $1.2 trillion or more in deficit reduction by November 23, 2011. The bill also includes a provision that allows for fast-track floor procedures in both chambers until December 23, 2011. If the super-committee fails to report a bill by the November 23, or either chamber fails to act within a month subsequent to that date, the super-committee loses its privileges to recommend savings.
• Enforcement. Should Congress fail to act on the super-committee's recommendations, or if those provisions do not meet the pre-determined deficit reduction goals, further budgetary cuts based on the difference between the $1.2 trillion number and anything enacted by Congress will go into effect. The legislation allows for those reductions to be divided equally between "non-security" and "security" spending.

In the deal, President Obama received greater assurance in terms of managing the country's borrowing practices, while at the same time committing the country to at least $2.4 trillion in spending reductions. His administration will not have to face another debt-ceiling debate until after the 2012 election. However, he conceded that the deal was far from optimal.

"Is this the deal I would have preferred? No. We could have made the tough choices required on entitlement reform and tax reform right now rather than through a special congressional committee process," the president said. "But this compromise does make a serious down payment on the deficit reduction we need and ensures that we will not face this crisis in six months or eight months or twelve months."

Meanwhile, as the president was announcing the deal in the White House press room, Speaker John Boehner (R-OH) hosted a conference call with members of his conference touting the work accomplished. With subtlety, the Speaker indicated that Republicans resisted calls for enhanced revenues in the deal - something that Republicans can take home to their constituents.

"This has been a long battle - we've fought valiantly - and frankly we've done it by listening to the American people," Boehner said. " And as a result, our framework is now on the table that will end this crisis in a manner that meets our principles of smaller government."