US President Joe Biden and Republican Speaker of the House of Representatives Kevin McCarthy have reached a tentative deal to raise the debt ceiling, removing the threat of a US debt default. The agreement, reached following a 90-minute phone call between the two leaders, aims to raise the limit on the amount the US government can borrow. Treasury Secretary Janet Yellen had warned of the risk of running out of money to pay bills by June 5th if the debt limit was not raised, potentially leading to economic turmoil.
The proposed deal still needs to be backed by the House of Representatives and the US Senate, where it may face opposition from both conservatives and progressives who are unhappy with certain aspects of the agreement. However, President Biden described the deal as a “compromise” and emphasized its importance in preventing a catastrophic default that could have resulted in economic recession, job losses, and damage to retirement accounts.
The agreement is expected to include reductions in government spending while protecting critical programs for working people and promoting economic growth. House Speaker Kevin McCarthy stated that the deal would also focus on historic spending reductions, exclude new taxes or government programs, and introduce reforms to lift people out of poverty. The legislative text of the deal is set to be published on Sunday, with a vote in the House of Representatives scheduled for Wednesday.
However, there are concerns among some conservatives, including Republican Representative Bob Good, who tweeted that he had heard the deal would increase the US debt by $4 trillion, stating that such an increase would be unacceptable for conservatives. The proposed package includes a two-year budget deal that would maintain flat spending for next year and increase it by 1% for 2025, alongside raising the debt limit for two years. Military spending is also expected to see an increase.
The deal marks a significant step towards averting a potential US debt default, but its final approval and implementation are dependent on the support of the House of Representatives and the US Senate.
