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By Allison Linn Senior writer
msnbc.com
updated 8/1/2011 2:08:34 PM ET 2011-08-01T18:08:34

A tentative agreement to raise the U.S. borrowing limit and cut spending by trillions of dollars over the next decade will not drastically change Americans’ lives immediately — but it could have more significant impacts down the road.

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Here’s a look at how the deal, as it stands now, could affect people’s lives.

Risk of default: Most economists did not seriously expect Congress to allow the deadline to raise the debt limit to expire on Tuesday.

Nevertheless, the news that Congress appears close to reaching an agreement to raise the U.S. borrowing limit means that the government will not default on payments to Treasury bond investors and will be able to send out things like Social Security checks.

Story: House passes bill to prevent US default

“The fact that there’s no default tomorrow is reason to be incredibly pleased,” said Paul Dales, U.S. economist with Capital Economics.

Medicare, Medicaid and Social Security: Under the current plan, people who receive government benefits like Medicare, Medicaid and Social Security will not likely see an immediate change.

“If you’re worried about getting your check next month, it looks like you’re in the clear,” said Dean Baker, co-director of the Center for Economic Policy and Research.

But that doesn’t mean changes won’t come later . Under the plan, a committee will be set up to hammer out a second set of cuts, and the White House has said that entitlement programs and tax reforms could be considered.

In addition, if the committee can’t reach an agreement, then an automatic set of cuts would be enacted by 2013. That includes cuts to how much medical providers get from Medicare, which could have an effect on how many doctors choose to accept Medicare patients. Social Security and Medicaid would not be affected by the automatic cuts.

Those kinds of tradeoffs are part of the compromises hammered out by Democrats and Republicans for this last-minute deal, and could signal more acrimony down the road as the committee tries to figure out its next cuts.

Taxes: Under the current agreement, taxes are unlikely to be raised in the short term. However, that doesn’t mean Americans have escaped the possibility of tax increases altogether. In the coming few years, as the Bush tax cuts expire and Congress continues the hard work of coming up with enough money to pay its bills, some economists believe increases are all but inevitable.

“Americans will probably be paying more taxes and receiving less from the government,” Dales said.

State and local governments also may raise sales taxes or other forms of payments as they seek to balance their budgets.

“If we can’t cut expenses enough, we need to increase revenues,” said Roger Staiger, an adjunct faculty member at Johns Hopkins University with the real estate department, who has been following the debate closely.

Defense: The tentative compromise calls for reducing defense spending by $350 billion over 10 years, the first such cuts in years. Economists say most Americans shouldn’t feel the effect of these cuts, which could be simply absorbed by the winding down of the wars in Iraq and Afghanistan.

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The possible exceptions include companies that do business with the Defense Department.

Moving on: Perhaps the biggest benefit of the tentative deal would be that Congress can move on from discussing the debt limit to focusing on other issues Americans care about, most notably the shaky economy.

A spate of bad economic news, including a weak jobs report for July and slow economic growth in recent months, has many worried that we are in danger of slipping back into recession.

“My hope is that we’ll start to talk about the economy again,” Baker said.

Vote: Is the debt deal the right thing for the country?

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