United States President Joe Biden has finalised an agreement with House Speaker Kevin McCarthy to raise the debt ceiling over two years until January 1, 2025, saying the deal is ready to move to Congress for a vote.
The Democratic president and Republican speaker spoke on Sunday evening as negotiators rushed to draft and post the bill’s text to enable lawmakers to review compromises that are unlikely to be popular with progressive Democrats or hard-right Republicans.
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The two men hope they can secure sufficient votes before the June 5 deadline to avert a first-ever default by the federal government. A vote in the House is expected on Wednesday.
“Good news,” Biden declared on Sunday evening at the White House.
“The agreement prevents the worst possible crisis – a default – for the first time in our nation’s history,” he said. “Takes the threat of a catastrophic default off the table.”
The deal follows weeks of heated negotiations between Biden and Republicans to avoid a default that could cause financial markets to freeze up and lead to an international financial crisis.
Analysts say millions of jobs would vanish, borrowing and unemployment rates would jump, and a stock market plunge could erase trillions of dollars in household wealth. A default would all but shatter the $24 trillion market for treasury debt.
Biden said he expected McCarthy to have the necessary votes for the deal to pass.
The compromise announced late on Saturday includes spending cuts, but risks angering some lawmakers as they take a closer look at the concessions.
The 99-page bill will also claw back unused COVID-19 funds, speed up the permit process for some energy projects and include extra work requirements for food aid programmes for poor Americans.
Senate Republican Leader Mitch McConnell applauded the agreement and called on the Senate to act swiftly to pass it without unnecessary delay once it has gone through the House.
“Today’s agreement makes urgent progress toward preserving our nation’s full faith and credit and a much-needed step toward getting its financial house in order,” McConnell said.
McCarthy dismissed threats of opposition within his own party, saying “over 95 percent” of House Republicans were “overwhelmingly excited” about the deal.
“This is a good strong bill that a majority of Republicans will vote for,” the California Republican told reporters at the US Capitol. “You’re going to have Republicans and Democrats be able to move this to the president.”
Republicans control the House by a 222-213 majority, while Democrats control the Senate by 51-49. These narrow margins mean that moderates from both sides will have to support the bill if it is opposed by hardliners in either or both parties.
“I’m not happy with some of the things I’m hearing about,” Representative Pramila Jayapal, who chairs the Congressional Progressive Caucus, told CNN’s State of the Union.
She praised the deal that she said would save Medicaid from benefit cuts while expanding the safety net to veterans and homeless people.
“We kept the student debt responsibility that we have,” she said, referring to Biden’s policy of limited loan forgiveness.
Progressive Democrats in both chambers had said they would not support any deal that had additional work requirements for government food and healthcare programmes.
The deal does add work requirements to food aid for some people aged 50 to 54, but White House officials said the carefully worded text would mean that roughly the same number of people would be subject to the requirements as is the case under current law.