Washington – Negotiators for President Biden and Republican leaders in Congress Saturday night hit a last-minute agreement in principle to increase the debt ceiling, confirmed House Speaker Kevin McCarthy. The two sides reached the tentative agreement after weeks of delays that rocked markets and raised fears of a catastrophic default.
Biden and McCarthy talked over the phone earlier Saturday night, CBS News learned, after hours of marathon negotiations.
“I just hung up on the president a while ago,” McCarthy tweeted. “After he wasted time and refused to negotiate for months, we have reached an agreement in principle worthy of the American people.”
McCarthy was on Capitol Hill all weekend, and he told reporters on Saturday morning that he was “optimistic” a deal would be reached.
A source familiar with the negotiations told CBS News that the deal raises the debt ceiling for two years and keeps non-military spending stable at fiscal year 2023 levels for another two years.
Non-defence spending would then increase by 1% in fiscal year 2025.
The agreement also fully funds medical care for veterans and includes funding for the PACT Act, which was passed last year, and extends benefits to 3.5 million veterans who were exposed to toxic burns in times of war.
The breakthrough came just days before the government was expected to exhaust its ability to pay its bills, an unprecedented event that would send shockwaves through the global economy. On Friday, Treasury Secretary Janet Yellen pushed back the estimated deadline on the so-called “x-date” of June 1 to June 5, giving negotiators some breathing room.
The Republican House leadership informed rank-and-file GOP members that they would hold a conference call at 9:30 p.m. Eastern Saturday to update them on the negotiations, two sources familiar with the talks told CBS News.
The details of the agreement were not immediately clear and the risk of default remains, given the small margin of error in the drafting and passage of the bill in Congress. Lawmakers must now turn the agreed-upon provisions into actual legislative text, a process that typically takes several days. It must then go through both houses of Congress, overcoming expected opposition from members of both parties.
Conservatives have demanded drastic spending cuts in exchange for raising the debt ceiling, which Democrats say should be raised unconditionally. Passing the deal in the House will likely require the votes of dozens of Democrats to offset conservative Republicans who vote against the measure. Some progressives have also vowed to oppose any bill that cuts spending too much.
Both the House and Senate are suspended for the Memorial Day recess, further complicating the timeline for passing a bill. Congressional leaders have warned their respective members to be ready to return to Washington at short notice to vote on a deal.
White House officials and McCarthy representatives had met on Capitol Hill and the White House on and off for days to work out the details of a deal since Mr Biden re-engaged on the issue, after insisting he would not negotiate on the raise of the debt ceiling.
House Republicans passed a bill in April that represented their opening bargaining position. This legislation would have raised the debt ceiling by $1.5 trillion or until the end of March 2024, and cut federal spending by $4.5 trillion. Democrats have accused Republicans of trying to cut programs for those who need them.
McCarthy and Biden met several times to try to resolve their differences when the talks seemed to reach an impasse, and both called their meetings “productive.” But hammering out details they could agree on and sell to their constituents proved difficult.
Before a deal is reached, for example, Republican Senator Mike Lee of Utah said he “would use every procedural tool at my disposal to prevent a debt ceiling agreement that contains no spending substantial or budgetary reforms”.
Yellen has repeatedly warned This early June is when the United States will likely be unable to pay its bills.
“It seems almost certain that we won’t be able to top early June,” Yellen said during a virtual appearance with The Wall Street Journal’s CEO Council Summit on Wednesday.
— Ed O’Keefe and Zak Hudak contributed to this report.
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