An “agreement in principle” between President Joe Biden and House Speaker Kevin McCarthy would raise the nation’s statutory debt ceiling, but Congress now has just days to approve a package that includes spending cuts and A potentially catastrophic U.S. default would be avoided.
The compromise announced late Saturday threatened to anger Democratic and Republican lawmakers as they began to unravel the concessions. Negotiators agreed to some Republican demands to increase work requirements for food stamp recipients, which House Democrats said were impossible. But hagglers have not cut spending across the board as Republicans had hoped.
Support from both parties is needed to win congressional approval ahead of the government’s expected June 5 default on U.S. debt. Lawmakers are not expected to return to work from Memorial Day weekend until Tuesday at the earliest, and McCarthy has promised lawmakers that he will abide by the 72 hours before the vote to release any bill.
White House officials plan to brief House Democrats via video call on Sunday.
The agreement was reached after the Democratic president and the Republican speaker spoke on the phone Saturday night. The country and the world have been watching and waiting for a resolution to the political impasse that threatens the U.S. and global economies.
“This agreement represents a compromise that means not everyone gets what they want,” Biden said in a statement. “This is the responsibility of governing.”
Biden said the deal “is great news for the American people because it avoids what could have been a catastrophic default and lead to a recession, wrecked retirement accounts and the loss of millions of jobs.”
“We have a lot of work to do,” McCarthy said in brief remarks at the Capitol.
But he added: “I believe this is a deal that in principle is worth reaching to the American people.”
With the outlines of a deal in hand, legislation can be drafted and shared with lawmakers in time for a vote in the House as soon as Wednesday and the Senate later next week.
At the heart of the compromise is a two-year budget deal that would keep spending unchanged in 2024 and increase spending by 1% in 2025 in exchange for a two-year increase in the debt ceiling, which would put the turbulent political The question is pushed until after the next presidential election.
Republicans, pushing hard for a deal that would impose stricter work requirements for recipients of government aid, achieved some, but not all, of what they wanted. The deal will raise the current working age from 49 to 54 for able-bodied adults, without children. Biden was able to secure waivers for veterans and the homeless.
The two sides also agreed on an ambitious federal licensing reform plan to ease the development of energy projects. Instead, the agreement would amend the landmark National Environmental Policy Act, which would designate “a single lead agency” to conduct environmental reviews in an effort to streamline the process.
The deal came after Treasury Secretary Janet Yellen told Congress the U.S. could default on its debt by June 5 — four days later than previously estimated — if lawmakers don’t act in time. Raise the national debt ceiling, currently at $31 trillion, to allow more borrowing to pay the bills the country has already incurred.
McCarthy has a slim majority of Republicans in the House, where far-right conservatives are likely to resist any deal that is not adequate because they would try to cut spending. By compromising with Democrats to gain votes, he risks losing his own grassroots and file support, setting up a career-challenging moment for the new speaker.
Both parties say one of the main obstacles is Republican efforts to expand work requirements for recipients of food stamps and other federal aid programs, a longstanding Republican goal that Democrats have vehemently opposed. The White House called the Republican proposal “cruel and senseless.”
Biden has said the Medicaid work requirement is out of the question. Despite opposition from rank-and-file Democrats, he appeared open to negotiating changes to food stamps, now known as the Supplemental Nutrition Assistance Program (SNAP).
Americans and the world are watching with unease on the brinkmanship of the negotiations, which threatens to throw the U.S. and global economies into disarray and undermine the world’s confidence in the country’s leadership.
Anxious retirees and others are already making contingency plans for missed checks, with the next Social Security payment due next week.
Yellen said failure to act by the new date would “create serious hardship for American families, undermine our global leadership and raise questions about our ability to defend our national security interests”.