Biden and McCarthy Reach Tentative Debt Ceiling Deal in US

US President Joe Biden and House Speaker Kevin McCarthy have reached a tentative agreement to suspend the federal government’s $31.4 trillion debt ceiling, putting an end to months of stalemate. The deal, announced without fanfare, reflects the contentious nature of the negotiations and the challenging path it must navigate through Congress before the United States faces a potential default in early June.

McCarthy tweeted about the agreement, highlighting the long delay in negotiations but acknowledging the compromise: “After he wasted time and refused to negotiate for months, we’ve come to an agreement in principle that is worthy of the American people.” Biden, in a statement, called it “an important step forward” and emphasized the responsibility of governing, stating that compromises mean not everyone gets everything they want.

Under the proposed deal, the debt limit would be suspended until January 2025, with spending capped in the 2024 and 2025 budgets. It would also involve reclaiming unused COVID-19 funds, expediting the permitting process for certain energy projects, and introducing additional work requirements for food aid programs. The agreement was reached after a series of phone calls, including a 90-minute call between Biden and McCarthy. The bill is expected to be finalized on Sunday, followed by discussions with Biden and a vote on Wednesday.

Passing the deal will require bipartisan support as it needs to clear both the Republican-controlled House of Representatives and the narrowly divided Senate. Negotiators have agreed to cap non-defense discretionary spending at 2023 levels for one year and increase it by 1 percent in 2025. McCarthy described the deal as having historic spending reductions, consequential reforms, and no new taxes or government programs.

The agreement aims to prevent an economically damaging default, provided it is successfully passed through Congress before the Treasury Department faces a shortfall of funds to meet its obligations. Failure to raise the debt ceiling by June 5 could lead to severe consequences, including a recession and global economic instability.

Early details of the deal faced criticism from some Republicans, who were concerned about increased debt and perceived capitulation. The vote outcome remains uncertain, as it will depend on member sentiment and the ability to garner enough support from moderate members to overcome opposition from both conservative Republicans and progressive Democrats. The bill will also face scrutiny in the Senate, where at least nine Republican votes will be needed for it to pass. The process still poses potential obstacles and opportunities for delay in both chambers.