Deal Reached To Raise Debt Ceiling As US Default Looms

Joe Biden and Kevin McCarthy agreed to lift the debt ceiling. The federal government's debt is $31.4tn. The agreement was made just in time to avoid default. McCarthy is a speaker for the House Republicans.

On Saturday, Biden said the agreement was a big step forward. He said it was a compromise but still protected what Democrats wanted the most.

In a statement, he said the agreement is a compromise. Not everyone gets what they want. Governing requires compromise.

McCarthy stated that there's much work to be done, but found the deal to be deserving of the American people.

Biden and McCarthy talked on the phone for 90 minutes. It was on Saturday at night. They discussed the deal.

Details of the agreement are not fully confirmed. The deal could last two years. This would mean no more standoffs until after the 2024 presidential election. The debt limit would be raised as part of the deal.

Biden said it's a big step forward. It cuts down on spending but keeps important programs. It helps working people and grows the economy. The text is still being worked on. He wants congress to pass it.

McCarthy says no new taxes in the bill. The bill cuts spending. It has reforms to get people out of poverty and into jobs. These are historic changes.

McCarthy said he'll finish writing the bill tomorrow and check with the White House. He plans to speak with the president again tomorrow afternoon. The bill will be posted tomorrow, and voting will happen on Wednesday.

The deal must get Congress' approval. The House has a tight Republican majority, so McCarthy may want help from Democrats.

The deal stops a default that would mess up the economy. The Treasury Department said if the debt ceiling wasn't raised by 5 June, it would happen.

The House of Representatives, led by Republicans, want to make big cuts to spending. They also want to take away money from the IRS, which collects taxes for the US government.

Republicans want to make it harder to get food stamps and other federal aid. Democrats don't like this. This is one reason why the two sides are having a hard time agreeing on a new coronavirus aid package.

The final deal's exact details are not available yet. However, negotiators agreed to cap non-defence discretionary spending for two years at 2023 levels. In return, they get a debt ceiling increase for a similar period. This information comes from sources who spoke to Reuters.

Both sides must be cautious in reaching a compromise. The House has a Republican majority of 222-213. The Senate has a Democratic majority of 51-49. The compromise must be able to pass both chambers.

The markets were scared during the long standoff. This made stocks go down and the US pay high interest rates for bonds. If the US defaulted, it would be even worse. Economists say it would cause a recession, hurt the global economy, and increase unemployment.

Biden didn't talk to McCarthy about spending cuts for a long time. Biden wanted a debt-ceiling increase without any extra rules before negotiations. Biden asked for a 2024 budget plan to fix issues he brought up in March. Biden and McCarthy started talks on 16 May.

Democrats say Republicans are playing a risky game with the economy. Republicans think the government is spending too much money, causing the debt to match the economy's yearly output.

McCarthy promised to give Congress members 3 days to read the bill before voting. This will see if moderate members are okay with the changes in the bill. He hopes this will help overcome resistance from right-wing Republicans and liberal Democrats.

Afterwards, the bill must pass through the Senate. To succeed, it requires at least nine Republican votes. The process may take some time, as there are various chances to slow it down in each chamber.