WASHINGTON (AP) — President Joe Biden and House Speaker Kevin McCarthy have reached an “agreement in principle” to raise the country’s legal debt ceiling, but Congress must now rush to approve the program. spending cuts within days to avoid a potentially disastrous US. default.
The deal is likely to anger both the Democratic and Republican sides as lawmakers begin unpacking concessions made to compromise on Sunday. Negotiators agreed to some Republican demands for increased work requirements for food stamp recipients that had sparked an outcry from House Democrats as non-starters. But they stopped short of the deeper spending cuts Republicans wanted.
Support from both parties will be needed to secure congressional approval ahead of the government’s expected June 5 default on US debt.
The Democratic president and the Republican president reached an agreement after the two spoke on Saturday evening by telephone. The country and the world watched and waited for a resolution to a political impasse that threatened the US and global economies.
“The deal represents a compromise, which means not everyone gets what they want,” Biden said in a statement late Saturday night. “It is the responsibility to govern,” he said.
Biden called the deal “good news for the American people because it prevents what could have been a catastrophic default and would have led to an economic recession, devastated retirement accounts and millions of lost jobs.”
McCarthy, in brief remarks on Capitol Hill, said “we still have a lot of work to do.”
But the Republican president said, “I think this is a tentative agreement worthy of the American people.”
With the outline of an agreement in place, the legislative package could be drafted and shared with lawmakers in time for votes in the House as early as Wednesday, and later next week in the Senate.
At the heart of the package is a two-year budget deal that would keep spending flat for 2024 and raise it by 1% for 2025 in exchange for raising the debt ceiling for two years, pushing the volatile political issue higher. beyond the next presidential election.
Driving hard for a deal to impose tougher work requirements on government aid recipients, Republicans achieved some, but not all, of what they wanted. The deal would raise the age of existing work requirements for able-bodied adults without children from 49 to 54, but Biden was able to secure waivers for veterans and the homeless.
The two sides had also reached an ambitious overhaul of federal permits to facilitate the development of energy projects. Instead, the deal would put in place changes to the landmark 1970s National Environmental Policy Act that will designate “one lead agency” to develop environmental assessments, hoping to streamline the process. .
The deal was reached after Treasury Secretary Janet Yellen told Congress that the United States could default on its debts by June 5 – four days later than expected – if lawmakers don’t. did not act in time. Lifting the nation’s debt limit, now at $31 trillion, allows more borrowing to pay the nation’s already incurred bills.
Biden also spoke earlier in the day with Democratic congressional leaders to discuss the status of the talks. White House officials will brief House Democrats in a video call on Sunday.
McCarthy commands only a slim Republican majority in the House, fueled by far-right conservatives who can resist any deal as inadequate as they attempt to cut spending. But by compromising with Democrats for votes, he risks losing support from his own base, setting up a tough time for the new president’s career.
Both sides suggested that one of the main delays was a GOP effort to expand work requirements for recipients of food stamps and other federal assistance programs, a longtime Republican goal to which Democrats are committed. are vigorously opposed. The White House said the Republican proposals were “cruel and senseless”.
Biden said work requirements for Medicaid would be a no-start. He had seemed potentially open to negotiating changes to food stamps, now known as the Supplemental Nutrition Assistance Program, or SNAP, despite objections from grassroots Democrats.
Americans and the world watched with concern as the impasse in the negotiations could plunge the US and global economy into chaos and undermine the world’s confidence in the nation’s leadership.
Anxious retirees and others were already making contingency plans for missed checks, with the next Social Security payments due next week.
Yellen said failure to act on the new date would “cause serious hardship for American families, harm our position as a global leader, and raise questions about our ability to advance our national security interests.”
Any deal would have to be a political compromise in a divided Congress. Many Trump-aligned Republicans in Congress have long been skeptical of the Treasury’s projections, and they’re urging McCarthy to hold on.
Lawmakers are not expected to return to work from Memorial Day weekend until Tuesday, at the earliest, and McCarthy promised lawmakers he would abide by the rule to release any bill for 72 hours before voting.
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Associated Press writers Stephen Groves, Fatima Hussein, Farnoush Amiri, Seung Min Kim and video journalist Rick Gentilo contributed to this report.