A little more than a year ago, Congress and President Barack Obama sealed an agreement on the budget that was supposed to cut the deficit by $2.1 trillion over 10 years and make it easier for Congress to pass the appropriations bills setting agency budgets. Instead, the government is nearing a fiscal cliff and using a six-month spending bill to avoid a government shutdown.
A timeline of major events in the budget crisis:
—May-June: Facing a deadline to prevent a first-ever default on U.S. obligations, Vice President Joe Biden convenes talks with lawmakers on raising the government's borrowing cap and pairing the debt limit increase with deficit cuts. After several weeks, House Majority Leader Eric Cantor, R-Va., abandons the talks over Biden's insistence that any agreement include tax revenue increases.
—June-July: House Speaker John Boehner, R-Ohio and Obama hold secret negotiations on a larger budget agreement that includes up to $800 billion in higher tax revenues. Boehner abandoned the talks on July 23, saying Obama wanted higher taxes and not enough spending cuts.
—August: With a crisis looming, Obama and lawmakers reach agreement to avoid a U.S. default. Congress passes and Obama signs the Budget Control Act, which set appropriations "caps" for 10 years, saving $900 billion, and created a deficit "supercommittee" charged with recommending at least $1.2 trillion more in deficit reduction. The law effectively lifted the debt ceiling from $14.3 trillion to $16.4 trillion and set appropriations caps of $1.043 trillion for 2012 and $1.047 trillion for 2013.
—Aug. 5: The Standard & Poor's ratings agency downgrades the U.S. government's AAA credit rating, citing "political brinkmanship" in the debt limit debate.