WASHINGTON – 

President Obama announced Sunday night that a deal between the House and Senate has been reached to raise the debt ceiling. Obama says the deal will end the crisis and remove the cloud over the economy.

The president's announcement came in just as the Asian markets opened, helping to not only boost stocks, but also to raise the US Dollar.

White House, Lawmakers Bang out Deal

Details on the deal as still coming out. Various media outlets have reported that officials on both sides of the debate say the deal will include the following:

The debt ceiling would be raised in three phases, starting at over $900 billion 

$900 billion in spending cuts over 10 years so they don't create a drag on the economy 

A bipartisan committee would then find more cuts 

A vote on a balanced budget amendment, but no guarantee that it will pass 

Even though a deal has been reached, it doesn't mean this is over. A vote is still needed in both chambers. However, leadership on both sides of the aisle in the Senate say they support the deal.

Democratic Majority Leader Harry Reid said that both his party and opposition Republicans gave more ground than they wanted to. He said it'll take members of both political parties to pass the measure.

Minority Leader Mitch McConnell said that the pact "will ensure significant cuts in Washington spending" and he assured the markets that a first-ever default on U.S. obligations won't occur. Both the leaders said they will brief their colleagues tomorrow on the details of the agreement.

House Speaker John Boehner announced the deal to lawmakers during a conference call Sunday night. House Minority Leader Nancy Pelosi said she would take the plan to her fellow representatives Monday.

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Senate blocks Reid plan

Senate Republicans have blocked action on a Democratic approach to resolving the debt-ceiling crisis. It was a test vote largely unrelated to the talks between the White House and congressional leaders on a compromise that can clear both the House and Senate.

The Senate voted 50-49 to clear a procedural hurdle toward consideration of a bill put forth by Majority Leader Harry Reid. Sixty votes were needed to advance the measure. Reid himself was one of the people to vote against the deal, though no one has said why.

The outcome of the vote on Sunday did not affect the effort to come up with a compromise to stop the debt crisis, in which the government would be unable to meet all its debt obligations.

Tuesday, August 2 is the deadline the US Treasury Department says the debt ceiling must be raised by, otherwise the country will not be able to pay all of its bills. Several Wall Street analysis groups say the deadline is probably closer August 8-15.

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Frequently Asked Questions

Q: What is the debt ceiling?

A: It's a legal limit on how much debt the government can accumulate. The government takes on debt two ways: It borrows money from investors by issuing Treasury bonds, and it borrows from itself, mostly from the Social Security trust fund, which comes from payroll taxes. Congress created the debt limit in 1917. It's unique to the United States. Most countries let their debts rise automatically when government spending outpaces tax revenue. Congress has increased the debt limit 10 times since 2001.

Q: What is the federal deficit, and how does it differ from the debt?

A: The deficit is how much government spending exceeds tax revenue during a year. Last year, the deficit was $1.29 trillion. The debt is the sum of deficits past and present. Right now, the national debt totals $14.3 trillion _ a ceiling set in 2010.

Q: Why is the prospect of not raising the debt ceiling so worrisome?

A: The government now borrows more than 40 cents of each dollar it spends. If the debt ceiling does not rise, the government would need to choose what to pay and what not, including benefits like Social Security, wages for the military or other bills. It also might delay interest payments on Treasury bonds. Any default could lead to financial panic weakening the country's credit rating, the dollar and the already hobbled economy. Interest rates would likely rise, increasing the cost of borrowing for the government and ordinary Americans.

Q: Who holds the $14.3 trillion in outstanding U.S. debt?

A: The U.S. government owes itself $4.6 trillion, mostly borrowed from Social Security revenues. The remaining $9.7 trillion is owed to investors in Treasury securities _ banks, pension funds, individual investors, state and local governments and foreign investors and governments. Nearly half of that _ $4.5 trillion _ is held by foreigners including China with $1.15 trillion and Japan with $907 billion.

Q: How did the debt grow from $5.8 trillion in 2001 to its current $14.3 trillion?

A: The biggest contributors to the nearly $9 trillion increase over a decade were:

2001 and 2003 tax cuts under President George W. Bush: $1.6 trillion. 

Additional interest costs: $1.4 trillion. 

Wars in Iraq and Afghanistan: $1.3 trillion. 

Economic stimulus package under Obama: $800 billion. 

2010 tax cuts, a compromise by Obama and Republicans that extended jobless benefits and cut payroll taxes: $400 billion. 

2003 creation of Medicare's prescription drug benefit: $300 billion. 

2008 financial industry bailout: $200 billion. 

Hundreds of billions less in revenue than expected since the Great Recession began in December 2007. 

Other spending increases in domestic, farm and defense programs, adding lesser amounts.