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July 31st, 2011
05:20 AM ET

State of the Union Early Bird for July 31, 2011

(CNN)-It's early, and State of the Union is bringing you the best of the morning headlines to go with your cup of coffee.

This morning our guest host Gloria Borger will be bringing you the very latest on the debt ceiling negotiations, so be sure to watch our live interview with Senate Minority Leader Mitch McConnell at 9am ET.

DEBT CEILING TALKS

Sources: Debt deal calls for up to $2.8 trillion in savings

The framework of a tentative deal to raise the nation's debt ceiling calls for up to $2.8 trillion in total deficit reduction over the next decade, two sources familiar with the negotiations told CNN late Saturday night.

The agreement, still being negotiated by the White House and bipartisan congressional leaders, would allow the debt ceiling to be raised by enough to last at least through the end of 2012.

The debt limit would be increased in two stages, both of which would occur automatically - a key Democratic demand that would prevent a repeat of the current crisis before the next election.

White House, McConnell negotiating over last-ditch deal on debt

The emerging agreement calls for raising the $14.3 trillion debt limit by up to $2.4 trillion in two stages, with the debt limit rising unless two-thirds of both chambers of Congress disapprove, according to officials in both parties familiar with the talks. That would extend the Treasury’s borrowing authority into 2013, satisfying President Obama’s demand to avoid another showdown over the issue in the heat of the 2012 presidential campaign.

It was not immediately clear whether House Speaker John A. Boehner (R-Ohio) would accept the emerging framework, or whether he could persuade his fractious caucus to support it. But Boehner, too, showed signs of paving the way for compromise Saturday, convening a meeting of the Tuesday Group, a bloc of about 45 moderate Republicans whose votes would be key to pushing any deal through the House.

FACTBOX-How Congress could complete debt legislation

Rightward Tilt Leaves Obama With Party Rift

Mitch McConnell’s moment: Debt ceiling deal maker or deal breaker?

Some Democrats think McConnell is pushing for the creation of the committee with the expectation that it will fail to reach a deal, which would prompt a “trigger” essentially forcing through a new round of spending cuts. Democrats have insisted that a trigger also consist of tax increases.

Answers to the 7 big "what-ifs" of debt default

Taking a Closer Look at the Result of a Credit Downgrade

“A downgrade has lots of downsides, but they’re minor in comparison to not raising the debt ceiling on time, so I think the focus is correct at this point,” said Mark Zandi, chief economist at Moody’s Analytics, a sister company to the rating agency that rates debt securities.

“What’s most important is raising the debt ceiling. That’s the minimum that they need to do to make sure the recovery in fact remains a recovery.”

Law is murky on whether Obama can act on his own

Pelosi 'Clearly' Backs 14th Amendment Option In Debt Standoff, Congressman Reports

"Nancy clearly wants it," said the lawmaker, who requested anonymity. "Publicly? No. Privately? She thinks the president should do it. Period."

IN OTHER NEWS…

U.S. Jobless Rate Probably Unchanged in July

The U.S. probably failed to create enough jobs in July to reduce unemployment, showing anxiety over government debt deliberations and a slowdown in consumer spending have shaken employer confidence, economists said before reports this week.

Tempest in a Tea Party

Democratic lawmakers worry that the Tea Party freshmen have already “neutered” the president, as one told me. They fret that Obama is an inept negotiator. They worry that he should have been out in the country selling a concrete plan, rather than once more kowtowing to Republicans and, as with the stimulus plan, health care and Libya, leading from behind.

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