Deal on US debt ceiling reached ‘in principle’
Concessions likely to anger both Democrats and Republicans
US President Joe Biden and House speaker Kevin McCarthy reached an “agreement in principle” to raise the nation’s legal debt ceiling yesterday as they raced to strike a deal to limit federal spending and avert a potentially disastrous US default.
However, the agreement risks angering both Democratic and Republican sides with the concessions made to reach it. Negotiators agreed to some Republican demands for increased work requirements for recipients of food stamps that had sparked an uproar from House Democrats as a nonstarter.
Support from both parties will be needed to win congressional approval this week before a June 5 deadline.
The Democratic president and Republican speaker reached the agreement after the two spoke yesterday by phone, McCarthy said.
The country and the world have been watching and waiting for a resolution to a political standoff that threatened the US and global economies.
“The agreement represents a compromise, which means not everyone gets what they want,” Biden said.
“That’s the responsibility of governing.”
Biden called the agreement “good news for the American people, because it prevents what could have been a catastrophic default and would have led to an economic recession, retirement accounts devastated, and millions of jobs lost”.
McCarthy, in brief remarks 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 that’s worthy of the American people.”
With the outlines of a deal in place, the legislative package could be drafted and shared with lawmakers in time for votes early this week in the House and later in the Senate.
Central to the package is a twoyear budget deal that would hold spending flat for 2024 and impose limits for 2025 in exchange for raising the debt limit for two years, pushing the volatile political issue past the next presidential election.
The agreement would limit food stamp eligibility for able-bodied adults up to age 54, but Biden was able to secure waivers for veterans and the homeless.
The two sides had also reached for an ambitious overhaul of federal permitting to ease development of energy projects and transmission lines. Instead, the agreement puts in place changes in the National Environmental Policy Act that will designate “a single lead agency” to develop economic reviews, in hopes of streamlining the process.
The deal came together after 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 to raise the federal debt ceiling. The extended “X-date” gave the two sides a bit of extra time as they scrambled for a deal.
Any deal would need to be a political compromise in a divided Congress. Many of the hard-right Trump-aligned Republicans in Congress have long been skeptical of the Treasury’s projections, and they have been pressing McCarthy to hold out.
Lawmakers are not expected to return to work from the US Memorial Day weekend before Wednesday, at the earliest, and McCarthy has promised lawmakers he will abide by the rule to post any bill for 72 hours before voting.
The Democratic-held Senate has largely stayed out of the negotiations, leaving the talks to Biden and McCarthy.
However to pass the bill, both McCarthy and Biden will now have to sell it to their respective parties. While both sides are expected to lose some votes, they have to make sure that the deal is popular enough to pass both chambers without a revolt on either side.
The House will likely vote on Thursday, which would then send the bill to the Senate.
If all goes according to McCarthy’s plan — and both chambers are able to pass the legislation — the potential crisis should be resolved by June 5.