President Barack Obama arrives to speak in White House briefing room, Sunday, July 31, 2011, in Washington, about a deal being reached to raise the debt limit.

U.S. President Barack Obama says a deal has been reached with House and Senate leaders to raise the nation’s debt ceiling and keep the government from defaulting on its $14.3 trillion debt.

Mr. Obama appeared in the White House briefing room Sunday night to announce the proposed deal, which he said cuts $1 trillion in spending over 10 years and sets up a bipartisan panel in Congress to look at further reductions. He said everything will be on the table in talks on future cuts.

The president called the proposed deal a compromise that lets the country avoid default while making a serious down payment on deficit reduction.

Votes on the deal in both the House and Senate are expected Monday. Final approval would raise the debt limit and let the government keep paying its bills.

U.S. and overseas markets were nervously watching developments in Washington all day Sunday. If no deal is approved by Tuesday, it could set back a shaky world economy, which is still struggling to recover from recession.

U.S. stock markets suffered their worst losses of the year last week and the value of the dollar slumped.

All sides agree on the need to cut spending and raise the debt ceiling. But they have been squabbling for weeks on what to cut and how fast those cuts should be made.

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