“US reaches debt ceiling agreement to prevent catastrophic default”

America’s economy

US President Joe Biden and Republican House Speaker Kevin McCarthy have reached an agreement in principle to raise the government’s debt ceiling
31.4 trillion dollars, ending a months-long crisis.

However, the agreement was announced without any ceremony and in terms that reflect the bitter content of the negotiations and the difficult path that the agreement will go through in Congress before the United States defaults on its debts in early June.

“Just got off the phone with the president,” McCarthy wrote on Twitter. “After he wasted time and refused to negotiate for months, we have reached the deal in principle that the American people deserve.”

Biden described the agreement in a statement as “an important step forward,” and said, “The agreement represents a consensus, which means that not everyone gets what they want. This is the responsibility of the government.”

President Joe Biden urged the House and Senate to pass the US debt ceiling agreement “immediately.”

He indicated that work is underway to put the final touches on the legislative text of the agreement and present it to the House of Representatives and the Senate. Biden explained that the US debt ceiling agreement represents a “consensus” and an important step forward, and the debt ceiling will also prevent a “catastrophic default.”

The agreement raises the debt ceiling for two years and cuts spending over the same period. It also includes recovering unused COVID-19 funds and expediting the approval process for some energy projects and some additional business terms for food aid programs for poor Americans.

Biden and McCarthy had a 90-minute phone call on Saturday to discuss the agreement.

“We still have a lot of work to do tonight to finalize the text (of the agreement),” McCarthy told reporters at the Capitol.

And he indicated that he expected to finish drafting the text of the draft agreement today, Sunday, and then he would speak to Biden. A vote on the agreement is expected on Wednesday.

“It includes historic spending cuts and subsequent reforms that will move people out of poverty into the workforce,” he said. “There aren’t any
New taxes and government programmes.

A source familiar with the matter said negotiators agreed to keep non-defense spending at this year’s level for another year and increase it by 1 percent, in 2025.

If the agreement is passed in Congress before the Treasury Department can find the money to cover all its liabilities, the country will avoid a destabilizing debt default. The Treasury warned on Friday that this could happen unless the debt ceiling is raised before June 5th.

McCarthy said that Congress will vote on the debt ceiling law next Wednesday, pointing out that the agreement includes historic spending cuts.

“The US debt ceiling bill is expected to be finalized and published on Sunday,” McCarthy said.

Multiple sources familiar with the negotiations had said the White House and Republicans had an agreement in principle on a deal to raise the debt ceiling and spending cap.

And the American “CNN” network stated that the initial US debt repayment agreement will be reviewed in the coming hours.

One source said the agreement in principle was reached by President Joe Biden and Speaker McCarthy during their phone call on Saturday.

House GOP leaders had been planning to update all members on the status of the negotiations later in the evening, according to multiple sources familiar with the situation. The text of the deal will be reviewed soon by both sides to ensure it is in line with the initial agreement.

Despite the deal in principle, new problems could easily arise at every step along the way, each step likely to take a long time, before the debt default deadline early next month.

Closing the deal will not be an easy task for members, with stiff opposition expected from left and right. This means that it will require an extensive process – and support from both sides of the agreement – to get approval.

A source familiar with the negotiations told CNN earlier Saturday that a provision to impose new business requirements for some social safety net programs remained the final point of contention.

Republicans have been pressing hard, saying that beneficiaries of programs without dependents should be forced to follow the new rules. However, Democrats portrayed this idea as an attack on the poor.

McCarthy had arrived at the US Capitol on Saturday morning after his chief Republican negotiators, Rep. Garrett Graves of Louisiana and Patrick McHenry of North Carolina, worked late into the night hammering out the final details of the deal.

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