CBO: Debt ceiling deal cuts at least $2.1 trillion

NEW YORK (CNNMoney) -- The last-minute debt ceiling deal Congress is racing to enact would reduce deficits by at least $2.1 trillion over 10 years.

That's the verdict from the all-important nonpartisan Congressional Budget Office, which is the official scorekeeper for all legislation.

The numbers the CBO reported are largely in line with the estimates congressional leaders and the White House reported Sunday night in announcing the deal. (Read the full text of the bill)

In exchange for the debt reduction laid out by the bill, the debt ceiling will be allowed to increase by between $2.1 trillion and $2.4 trillion. That would cover Treasury's borrowing needs until 2013.

The CBO estimates that the Budget Control Act of 2011 would initially reduce deficits by $917 billion primarily by imposing caps on discretionary spending.

A breakdown of what's in the debt ceiling deal

Here's how the savings break down: Outlays for discretionary programs, which include defense spending, would be cut by $741 billion.

On top of that, $156 billion would be saved because of reduced interest costs on the country's debt. And $20 billion would be cut from education loan initiatives and by curtailing waste, fraud and abuse in other mandatory programs.

In terms of education spending, the bill would increase funding for Pell Grants by $17 billion between 2012 and 2015. It would also cut student loan funding by $22 billion over 10 years.

The spending caps in the bill would result in $21 billion in savings in the first year, and grow annually from there. By 2021, outlays would be reduced by $112 billion.

The legislation, however, does allow for the caps to be adjusted in any given year to account for emergency and disaster relief spending.

In addition, the bill calls for a new bipartisan congressional committee to propose ways to reduce deficits by between $1.2 trillion and $1.5 trillion. If the committee fails to do so or Congress fails to enact the committee's proposals, as much as $1.2 trillion would be cut automatically from many areas of federal spending.

CBO's estimates exclude spending on the wars in Iraq and Afghanistan and incorporate the spending cuts Congress approved in April.

The House approved the bill on Monday, and the Senate was expected to take it up on Tuesday.