Biden, McCarthy Agree To Raise Debt Ceiling

Joe Biden and Kevin McCarthy agreed to lift the $31.4tn federal government debt ceiling. This happened just before America was about to default. The deal is a principle agreement.

On Saturday, Biden said the agreement is a big move forward. He sees it as a deal that protects the important things for Democrats.

He said the deal was a compromise. This means not everyone is satisfied. Governing involves compromise.

McCarthy said there's a lot of work left. But he thinks the agreement is good for Americans.

Biden and McCarthy talked on the phone for 90 minutes on Saturday. They discussed the deal.

We don't know for sure the terms of the agreement. But we heard it would increase the debt limit for two years. This would prevent any more conflicts until after the 2024 presidential election.

Biden thinks it's a big step. It will save money, but keep important programs. The text isn't done yet, but he wants congress to approve the bill.

McCarthy said there will be no new taxes. The bill has big cuts in spending. These cuts will help people get jobs and leave poverty. They are important changes.

McCarthy said he will finish writing the bill. He will check with the White House and speak to the president tomorrow afternoon. The text will be posted tomorrow. The vote will happen on Wednesday.

The Congress needs to approve the deal. McCarthy might need help from Democrats to pass the proposal. Republicans have only a small majority in the House.

If the debt ceiling wasn't raised by June 5th, a default could happen, according to the Treasury Department. However, a deal has been made to avoid that and prevent economic instability.

House of Representatives Republicans want to cut spending a lot. They also want to take money from the US tax agency.

The Democrats and Republicans have different ideas about increasing work requirements for those who get food stamps and other federal assistance. This has caused problems. Republicans want people to work more while Democrats disagree.

The final deal hasn't been fully disclosed yet. However, the negotiating parties have agreed to limit non-defence expenses at the 2023 level for two years. In return, they will receive a raise in the debt ceiling for a similar duration. The sources say this according to Reuters.

Both sides need to find a compromise. The House has more Republicans than Democrats. The Senate has more Democrats than Republicans. It's important to navigate this carefully.

The financial markets were scared because of the long standoff. This made stocks go down and caused the United States to have to pay a lot of money to sell bonds. If the United States were to default, it would be even worse. Economists think there would be a recession, the world economy would suffer, and lots of people would lose their jobs.

Biden did not want to talk to McCarthy about cutting spending for a long time. First, he wanted lawmakers to approve increasing the debt limit without any extra conditions. He also asked for a budget proposal to take care of issues he brought up in March. But now, negotiations between Biden and McCarthy have started and both sides are serious about it.

Democrats say Republicans are risking the economy with dangerous actions. Republicans say the debt is growing from government spending. The debt is now equal to a year's worth of the economy's output.

McCarthy promises to let House members read the law for 72 hours. Then, they will vote on it. The test is to see if the moderate members like the law enough to make up for the hard-right and progressive opposition.

Next, the bill needs to win in the Senate, with a minimum of nine Republican votes. Both chambers have various chances to delay the proceedings.