US debt ceiling deal: Ending a months-long stalemate, US President Joe Biden and top congressional Republican Kevin McCarthy reached a tentative deal on Saturday evening to raise the federal government’s $31.4 trillion debt ceiling.
The deal was announced without any celebration that reflected the bitter tenor of the negotiations and the difficult path it has to pass through Congress before the United States runs out of money to pay its debts in early June.
Agreement in principle
“I just got off the phone with the president a bit ago. After he wasted time and refused to negotiate for months, we’ve come to an agreement in principle that is worthy of the American people,” McCarthy tweeted.
Biden called the deal “an important step forward” in a statement, saying: “The agreement represents a compromise, which means not everyone gets what they want. That’s the responsibility of governing.”
The deal would raise the debt limit for two years while capping spending over that time, claw back unused Covid funds, speed up the permitting process for some energy projects and include some extra work requirements for food aid programs for poor Americans.
90-minute phone call
Biden and McCarthy held a 90-minute phone call earlier on Saturday evening to discuss the deal. McCarthy planned to brief his members later in the evening.
“We still have more work to do tonight to finish the writing of it,” McCarthy told reporters on Capitol Hill. McCarthy said he expects to finish writing the bill Sunday, then speak to Biden and have a vote on the deal on Wednesday.
“It has historic reductions in spending, consequential reforms that will lift people out of poverty into the workforce, rein in government overreach – there are no new taxes, no new government programs,” he said.
Capping non-defence discretionary spending
Sources said negotiators have agreed to cap non-defence discretionary spending at 2023 levels for one year and increase it by 1% in 2025.
If the deal passes through the narrowly divided Congress, it will avert an economically destabilising default.
Biden and McCarthy have to carefully thread the needle in finding a compromise that can clear the House, with a 222-213 Republican majority, and the Senate, with a 51-49 Democratic majority.
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