The Budget Control Act of 2011 -- A Crisis Avoided

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“2010 changed the political landscape in dramatic fashion, and this debt deal represents a major shift to get our fiscal house in order. The terms of these cuts and of the tax and spending battles to come should have every one in America paying attention.” - Former Gov. Robert Ehrlich (RMD)

This Client Alert describes how Congress avoided the default of the U.S. Treasury, how it still must reduce government spending by an additional $1.5 trillion in the coming months, and what these cuts in funding can mean to industries such as healthcare, energy and defense.

On Tuesday, August 2, President Obama signed into law the Budget Control Act of 2011 (S. 365; Pub. L. No. 112-25 (2011)) (the “Act”) to raise the nation’s debt limit and avoid default. Two days earlier, after months of intense negotiations, the President and congressional leaders reached a final agreement on the legislation. Under its terms, the debt ceiling will be raised in tandem with reductions to federal spending. On Monday, the House passed the bill by a vote of 269-161, with 95 Democrats and 66 Republicans voting against it. The Senate approved the bill by a vote of 74-26 the next day, with six Democrats and 19 Republicans voting against it.

Please see full Alert below for further information.

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Published In: Elections & Politics Updates, Finance & Banking Updates, Tax Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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