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US President Joe Biden and House Speaker Kevin McCarthy reached an “agreement in principle” to limit federal spending and resolve the looming debt crisis before a June 5 deadline, McCarthy said late Saturday.
The deal would prevent a dangerous U.S. default, but risks angering Democrats and Republicans with concessions made.
The Democratic president and the Republican Speaker reached an agreement after the two spoke earlier on Friday evening by phone, McCarthy said, speaking on Friday night.
The country and the world have been watching and waiting for a resolution to the political standoff that threatens the US and global economy.
“Next [Biden] wasting time and refusing to negotiate for months, we have reached an agreement in principle that the American people deserve,” McCarthy said on Twitter.
Biden said the agreement “represents a compromise” but added it “protects the top priorities of Democrats and Congress.”
The centerpiece of the package is a two-year budget deal that would keep spending on average for 2024 and impose limits for 2025 in exchange for increasing the debt limit for two years, pushing a volatile political issue into the next presidential election.
Negotiators agreed to some Republican demands for increased work requirements on recipients of food stamps that have sparked an uproar from House Democrats as a nonstarter.
But he also appears to be still trying to compromise on federal changes that would allow changes that would ease regulations to develop oil, gas and renewable energy projects and develop new transmission line connections.
By confirming the deal, the legislative package can be drafted and shared with lawmakers in time for a vote early next week in the House and later in the Senate. Biden called on both chambers “to come to an agreement immediately.”
The debt ceiling is used as a bargaining chip
America and the world hate to see the confusion of negotiations that could throw the US economy into chaos and undermine the world’s confidence in the nation’s leadership.
The debt ceiling is a limit on US government debt that can only be raised through congressional authorization. The money, according to the US Treasury Department, is needed for the government to meet existing legal obligations, including social security and Medicare benefits, military salaries, interest on the national debt, tax returns, and other payments.
For decades, votes to raise the debt limit have largely gone without incident, but now they have become politicians and are now being used as bargaining chips holding the economy hostage to extract political demands, Douglas Holtz-Eakin, former director of the Congressional Budget Office who is the current president of the right-wing think-tank American Action Forum, previously told CBC News.
In this year’s negotiations, McCarthy and other Republicans pushed to cut spending in exchange for a deal that would raise the limit and avoid the first default on the federal debt.
Failure to lift the debt limit, currently at $31 trillion, to pay the bills the country is running on, will send shock waves through the US and global economy.
Many economists have predicted dire economic consequences as a result of the default, which could include a downgrade in credit ratings, impact on loans, negative impact on the dollar, and a potential crash in the financial markets, with thousands, if not millions, of job losses. – all leading to recession.
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