United States President Joe Biden struck a deal ‘in principle’ with Republican lawmakers to increase the debt ceiling of the country on Saturday, in a first crucial step towards averting the disastrous default with a few days to spare. On June 5, the government is likely to hit its borrowing limit which was increasing the chances of the world’s largest economy defaulting on its repayment obligations and putting the global markets on fire.
The negotiators agreed to cap the non-defence discretionary spending at 2023 levels for one year and increase it by 1% in 2025, said a source familiar with the deal, further adding that the agreement includes a two-year appropriations deal and a two-year debt limit extension, effectively resolving the issue until after the 2024 election. said.
Congress to vote on debt ceiling bill Wednesday: McCarthy
Confirming the striking of a deal in principle in ongoing negotiations between Republicans and the White House to increase the debt ceiling, Republican leader Kevin McCarthy said that Congress is likely to vote on Wednesday.
“I just got off the phone with the president a bit ago,” tweeted McCarthy on Saturday evening. “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,” he added.
Republicans are poised to deliver big, consequential change in Washington. Soon, we will vote for a responsible debt limit agreement that stops Democrats’ reckless spending, claws back unspent COVID funds, blocks Biden’s new tax schemes, & much, much more https://t.co/TQ7CblFsaM
— Kevin McCarthy (@SpeakerMcCarthy) May 28, 2023
McCarthy said that he will have another round of talks with President Biden on Sunday and oversee the final draft of the bill, further stating that the House of Representatives will be “voting on it on Wednesday.”
‘Compromise’ debt bill will avert ‘catastrophic default’, says Biden
President Biden said that the draft bill finalised on Saturday will increase the US debt ceiling and stop a “catastrophic default”.
The Democrat stated the bill was a “compromise, which means not everyone gets what they want.”
However, “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,” he added in a statement.
Earlier this evening, Speaker McCarthy and I reached a budget agreement in principle.
It is an important step forward that reduces spending while protecting critical programs for working people and growing the economy for everyone. And, the agreement protects my and…
— President Biden (@POTUS) May 28, 2023
The end of weeks of ongoing negotiations in Congress and the White House will help the government to add to its $31 trillion-plus debt and avert a downgraded credit rating, further decreasing the looming threat of recession.
Party leaders are now in a race against time to finalise the agreement through Congress as hard-right Republicans and Democratic progressives are crying foul over concessions made to finalise the deal.
US Treasury Secretary Janet Yellen had earlier issued a warning of a possible default on June 1 if the debt ceiling is not raised by Congress, however, the lawmakers received breathing room on Friday when the deadline was updated by her to June 5.
Even with the updated deadline, Congress needs to clear the legislation much more quickly than the time stipulated for even the most uncontroversial bills.
(With inputs from agencies)
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