With days to spare before a potential first-ever government default, President Joe Biden and House Speaker Kevin McCarthy reached final agreement Sunday on a deal to raise the nation's debt ceiling and worked to ensure enough Republican and Democratic votes to pass the measure in the coming week.
The Democratic president and Republican speaker spoke with each other Sunday evening as negotiators rushed to draft the bill text so lawmakers can review compromises that neither the hard-right or left flank is likely to support. Instead, the leaders are working to gather backing from the political middle as Congress hurries toward votes before a June 5 deadline to avert a damaging federal default.
The days ahead will determine whether Washington is again able to narrowly avoid a default on U.S. debt, as it has done many times before, or whether the global economy enters a potential crisis. A White House statement from the president, issued after Biden and McCarthy spoke by phone Saturday evening and an agreement in principle followed, said the deal “prevents what could have been a catastrophic default."
Central to the compromise is a two-year budget deal that would essentially hold spending flat for 2024, while boosting it for defense and veterans, and capping increases at 1% for 2025. That’s alongside raising the debt limit for two years, pushing the volatile political issue past the next presidential election.
The deal came together after Treasury Secretary Janet Yellen told Congress that the United States could default on its debt obligations by June 5 — four days later than previously estimated — if lawmakers did not act in time. Lifting the nation's debt limit, now at $31 trillion, allows more borrowing to pay bills already insurred.
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AP source: Biden, McCarthy reach final deal to prevent default, now must sell to CongressThe debt ceiling deal has come with just days to spare before a potential first-ever government default. On Sunday, President Joe Biden and House Speaker Kevin McCarthy reached a final agreement that they must press Congress to pass. The completion of the agreement by the leaderswas confirmed by a person familiar with the situation and granted anonymity to discuss it. The compromise announced late Saturday risks angering some Democratic and Republican lawmakers as they begin to unpack the concessions that include spending cuts. McCarthy and Biden spoke Sunday evening as negotiators work to draft the legislative text.
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