A bipartisan agreement to extend the US debt ceiling and prevent a rapidly approaching default is ready to be sent to Congress, according to President Joe Biden. While Republican House Speaker Kevin McCarthy had referred to the accord as “worthy of the American people,” he dubbed it a “compromise” on Sunday. Now they have to persuade Congress to adopt it. Long and contentious negotiations between Democrats and Republicans led to the proposed agreement on US debt ceiling.
The Treasury had warned the US will run out of money on 5 June without a deal. The US must borrow money to fund the government because it spends more than it raises in taxes. Republicans have been seeking spending cuts in areas such as education and other social programmes in exchange for raising the $31.4tn (£25tn) debt limit.
At a brief appearance before reporters on Sunday evening, President Biden said the proposed deal was “a really important step forward”. “It takes a threat of catastrophic default off the table, protects our hard earned and historic economic recovery. “And the agreement also represents a compromise which means no one got everything they want, but that’s the responsibility of governing.”Mr. Biden expressed his belief that Mr. McCarthy had negotiated in “good faith” and now possesses the votes for Congress to back the deal.
What is in the deal?
The House website has now published the proposed deal. According to it, non-defense government spending would remain largely flat for two years and then experience a 1% increase in 2025. The deal does not include any significant changes to Medicaid health insurance, and it fully funds medical care for veterans.
Lawmakers plan to streamline energy permitting laws in order to accelerate the approval time for new projects – a reform that Republicans have been advocating. In the agreement, they will claw back Covid relief funds that have not been spent, fulfilling another demand made by the Republicans. They have also proposed certain age changes for a government programme that offers food-purchasing assistance to individuals with low or no incomes.
Late on Saturday, news of a tentative deal emerged, but negotiations continued until Sunday before finalizing the agreement.Mr McCarthy on Saturday referred to “historic reductions in spending, consequential reforms that will lift people out of poverty into the workforce”. “There are no new taxes, no new government programmes,” he said.
However, he now faces a challenge to push it through the House, as some diehards among both Republicans and Democrats may oppose it. On Sunday, Republican Representative Chip Roy of Texas said he and some others were “going to try” to stop it passing. Republicans control the House by 222 to 213, while Democrats control the Senate by 51 to 49.
Mr McCarthy told Fox News on Sunday that more than 95% of House Republicans were very excited about the deal.