WASHINGTON (AP) — After weeks of negotiations, President Joe Biden and House Speaker Kevin McCarthy have announced an “agreement in principle” to raise the national debt ceiling and avoid a potentially catastrophic default.
The deal includes spending cuts demanded by Republicans, but falls short of cuts in sweeping legislation passed by the Republican-led House last month.
To cut spending, as Republicans had insisted, the package includes a two-year budget deal that would keep spending flat for 2024 and impose limits for 2025. That’s in exchange for raising the ceiling on the debt for two years, until after the next election.
It also expands some work requirements for food stamp recipients and changes an environmental law to try to streamline reviews to build new energy projects.
Treasury Secretary Janet Yellen said the United States could default on its debt obligations by June 5 if lawmakers do not act in time to raise the federal debt ceiling.
A preview of what’s next as Congress races to pass a deal:
FINALIZATION OF THE CASE
Speaking to reporters on Capitol Hill Saturday night, McCarthy said the bill provides “historic spending cuts, back-to-back reforms that will lift people out of poverty into the workforce and curb government excesses.” There are no new taxes and no new government programs.
Still, he said, “we still have work to do tonight to finish all the writing.” The speaker and his chief negotiators were still holed up in his office as midnight approached.
McCarthy said he would speak to Biden again on Sunday.
Biden said in a statement that “the following day, our negotiating teams will finalize the legislative text and the agreement will go to the United States House and Senate. I strongly urge both houses to pass the agreement immediately.
The deal is “an important step forward that cuts spending while protecting essential programs for workers and growing the economy for everyone,” Biden said.
SELL THE INVOICE
To pass the bill, McCarthy and Biden will now have to sell it to their respective parties. While both sides are expected to lose a few votes, they need to ensure the deal is popular enough to pass through both houses without revolt on either side.
McCarthy held a Saturday night call with the Republican caucus, fulfilling a promise he made to show them the deal before revealing the legislation to the public. He said he expects to release the text of the bill Sunday afternoon.
The reaction was mixed. Rep. Dan Bishop of North Carolina tweeted a vomit emoji, complaining that some Republicans on the call were praising the speaker for getting what he said was ‘almost zippo in exchange’ for the cap hike. the debt.
South Dakota Rep. Dusty Johnson, a McCarthy ally, said the people he spoke to were “incredibly supportive” of the deal, though he acknowledged they would lose some votes.
White House officials will give their own briefing to House Democrats on Sunday at 5 p.m., according to a House Democratic aide.
RETURNS FROM THE CONGRESS
The House and Senate are expected to return Tuesday, after Memorial Day. McCarthy said the House would vote on Wednesday, which would then send the bill to the Senate.
Once the bill reaches the Senate, where Democrats hold a majority, the pace of action will largely depend on whether senators attempt to delay the bill, possibly with amendment votes. This could block the legislation for a few days.
However, the Senate can act quickly when it has the agreement of 100 senators. The bill could pass by the end of the week, with a quick sign-off from Biden to make it law.
If all goes according to McCarthy’s plan — and both chambers are able to pass the legislation — the potential crisis should be resolved by June 5, when the Treasury Department expects the U.S. are likely to fail.
“This deal is 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,” Biden said in his statement. Saturday night press release.
___
Associated Press writers Lisa Mascaro, Seung Min Kim and Zeke Miller contributed to this report.