US President Joe Biden and Speaker of the House Kevin McCarthy have reached a tentative agreement to raise the federal government’s $3.4 trillion debt ceiling days before the presidential election. deadline to prevent a possible catastrophic default.
Saturday’s deal would raise the debt limit for two years while limiting spending during that time, but risks angering both Democrats and Republicans with concessions made to reach the deal. that agreement.
Support from both sides will be needed to win congressional approval next week before the US runs out of money to repay its debt on June 5.
The Democratic president and Republican speaker reached an “agreement in principle” on Saturday after they had a 90-minute phone call.
“The deal represents a compromise, which means not everyone gets what they want,” Biden said in a statement late Saturday. “It is the responsibility of management,” he said.
The president called the deal “good news for the American people, as it averts what could be a catastrophic default and could lead to an economic downturn, devastated retirement accounts and millions of dollars.” lost jobs”.
McCarthy, in a brief speech at the Capitol, said “we still have a lot of work to do.” But the Republican speaker said: “I believe this is an agreement in principle worthy of the American people.”
He added that he expected to finish writing the bill on Sunday, then talk to Biden and vote on the deal on Wednesday.
At the heart of the package is a two-year budget deal that would keep spending unchanged for 2024 and impose limits for 2025 in exchange for a two-year debt limit increase, pushing the volatile political issue through. next presidential election.
The agreement will also recover unused COVID-19 funds, speed up the licensing process for some energy projects, and include some additional work requirements for food assistance programs for Americans. poor. For example, it would limit the ability to get food stamps for healthy adults up to age 54, but Biden was able to secure exemptions for veterans and the homeless.
The agreement will prevent a Debt defaults cause economic instabilityas long as Biden and McCarthy succeed in passing a split Congress narrowly before the Treasury Department runs out of money to cover all of its obligations.
Al Jazeera’s Mike Hanna, reporting from Washington DC, said there was “a long way” before the deal could pass the House, with a 222-213 Republican majority, and the Senate, with a 51 majority. -49 of the Democratic Party.
“Many conservative Republicans will consider the cuts too modest, while many progressive Democrats will consider them too strict. So there will be Republicans and Democrats who rebel against this,” he said.
He added: “It will be days of debate to get all parties involved, to get enough combined Republican and Democratic votes to pass this legislation and send it to the president to sign into law. .”
Such lengthy debt ceiling negotiations are partly because the Biden administration has refused to negotiate with McCarthy for months, arguing that the country’s complete confidence and credit should not be used as leverage to draw on other partisan priorities.
Republicans have pushed for drastic cuts in spending and other conditions, saying they want to slow the rate of growth in U.S. debt, which now roughly equals the annual output of the country’s economy.
Meanwhile, Democrats accuse Republicans of playing a dangerous game of pitting war with the economy.
Only two-way negotiations between Biden and McCarthy Start in earnest on May 16.
The protracted stalemate has alarmed financial markets, weighed on equities and forced the US to pay record-high interest rates in a number of bond sales. Economists say a default would have far more severe consequences, potentially pushing the country into recession, shaking the world economy and leading to a spike in unemployment.
The last time the nation came this close to default was in 2011, when Washington had a Democratic president and Senate and a Republican-led House of Representatives.
Congress eventually averted the default, but the economy suffered severe shocks, including the first downgrade of the top U.S. credit rating and a sell-off in equities. big vote.