Biden, GOP reach debt-limit deal, now Congress must approve it to prevent catastrophic default

An “agreement in principle” between President Joe Biden and House Speaker Kevin McCarthy would raise the nation’s legal debt limit, but Congress now has only to approve a package that includes spending cuts and potentially devastating Will avoid US default.

The agreement announced late Saturday angered both Democratic and Republican lawmakers as they begin to open up concessions. Negotiators agreed to some Republican demands for increased work requirements for recipients of food stamps, which House Democrats called a non-starter. But the negotiators stopped short of the overall higher spending cuts that Republicans wanted.

Bipartisan support will be needed to get Congressional approval before the anticipated June 5 government default on US debts can occur. Lawmakers are not expected to return to work by Memorial Day weekend until Tuesday at the earliest, and McCarthy has promised lawmakers he will adhere to a rule on posting any bills 72 hours before voting.

White House officials plan to brief House Democrats on a video call on Sunday.

The agreement was reached after a phone conversation between the two Democratic presidents and the Republican speaker on Saturday evening. The nation and the world await a resolution to the political impasse that threatens the US and global economies.

“The settlement represents a compromise, which means not everyone gets what they want,” Biden said in a statement. “It is the responsibility of governing.”

Biden said the deal was “good news for the American people because it prevents a catastrophic lapse that would have led to an economic downturn, devastated retirement accounts and lost millions of jobs.”

McCarthy said in brief remarks at the Capitol that “we still have a lot of work to do.”

But he added: “I believe this is a settlement in principle that the American people deserve.”

With the outline of an agreement, the legislative package could be drafted and shared with lawmakers for votes in the House as early as Wednesday and later in the coming week in the Senate.

Central to the compromise is a two-year budget deal that would see spending flat for 2024 and a 1% increase for 2025 in exchange for raising the debt ceiling for two years, further elevating the volatile political issue ahead of the next presidential election. will increase.

Pushing hard for a deal to impose tougher requirements on government aid recipients, Republicans achieved some, but not all, of what they wanted. The settlement would raise the age for current work requirements on able-bodied adults, without children, from 49 to 54. Biden was able to secure exemptions for veterans and the homeless.

The two sides also reached for an ambitious overhaul of federal permitting to ease the development of energy projects. Instead, the agreement will make changes to the landmark National Environmental Policy Act that designate a “single lead agency” to develop the environmental review, in hopes of streamlining the process.

Treasury Secretary Janet Yellen told Congress that the United States could default on its debt obligations by June 5 – four days later than previously estimated – if lawmakers did not act in time for a deal to come together. Raising the nation’s debt ceiling, which is now $31 trillion, allows for more borrowing to pay the country’s already spent bills.

McCarthy commands only a slim Republican majority in the House, where hard-right conservatives may oppose any deal as they try to reduce spending. By compromising with Democrats for votes, he risks losing support from his own rank and file, setting up a career-challenging moment for the new speaker.

Both sides have suggested that the GOP’s main holdup was to expand work requirements for recipients of food stamps and other federal aid programs, a longtime Republican goal that Democrats have strongly opposed. The White House said the Republican proposals were “cruel and senseless”.

Biden has said that work requirements for Medicaid would be a non-starter. Despite objections from rank-and-file Democrats, he seemed potentially open to negotiating changes to food stamps, now known as the Supplemental Nutrition Assistance Program, or SNAP.

Americans and the world were watching with unease the fragility of negotiations that threatened to plunge the US and global economy into chaos and erode the world’s faith in the nation’s leadership.

With the next Social Security payment due next week, anxious retirees and others were already making contingency plans for missed checks.

Yellen said that failing to act by the new date “will cause severe hardship to American families, damage our global leadership position and call into question our ability to protect our national security interests.”