President Joe Biden and House Speaker Kevin McCarthy reached a tentative agreement late on Saturday to reduce government spending and raise the debt ceiling, which is a crucial step in preventing the US from defaulting on its debt at the beginning of next month.
An “agreement in principle” had been struck for a two-year budget that keeps spending steady in 2024 and caps spending growth at 1% in 2025, according to multiple officials who verified the arrangement to Just the News on Saturday night. Up until the next presidential election, the debt ceiling would be lifted.
To prevent a U.S. default, the plan still needs to be developed and approved by the House and Senate, according to the officials.
“We still have a lot of work to do. But I believe this is an agreement in principle that’s worthy of the American people,” McCarthy said. “It has historic reductions in spending, consequential reforms that will lift people out of poverty into the workforce, rein in government overreach.
“There are no new taxes, no new government programs. There’s a lot more within the bill,” he added.
Biden said the compromise “means not everyone gets what they want.”
“It is an important step forward that reduces spending while protecting critical programs for working people and growing the economy for everyone,” the president said. “And, the agreement protects my and Congressional Democrats’ key priorities and legislative accomplishments.”
Some Republican requests for stricter job requirements for people receiving food stamps were conceded during negotiations, despite the strong opposition of many Democrats to this idea.
McCarthy tweeted the following on Saturday night and couldn’t help but criticize Biden: “I just got off the phone with the president a bit ago. 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.”
“Big, thorny issues remain,”‘ one of the top negotiators, Rep. Patrick McHenry, R-N.C., told reporters in the evening. Some of those outstanding issues, McHenry said then, “the president and speaker have to resolve at that level.”
The House of Representatives’ Republican majority has pushed for drastic budget cuts as well as other restrictions, such as adding new work requirements to some benefit programs for low-income Americans and taking money away from the Internal Revenue Service, the country’s tax collection agency.
The U.S. debt, which is now almost equivalent to the annual output of the nation’s economy, is growing too quickly, according to Republicans, who want to bring it down.
In exchange for a raise in the debt ceiling over a comparable time period, negotiators have agreed to limit non-defense discretionary spending at levels from 2023 for two years. Exact specifics of the final agreement were not immediately available.
Finding a deal that can pass muster with the Republican-majority House (222-213) and Democratic-majority Senate (51-49) will require delicate needle-threading on the part of both sides.
Their fresh phone conversation on Saturday came after Treasury Secretary Janet Yellen warned Congress that if lawmakers do not move swiftly to extend the federal debt ceiling, the United States could default on its financial commitments by June 5 – four days later than originally predicted.
The possibility of an economic catastrophe in the event of a default by the government has been raised by economists for months, but the White House and Republican leadership believe they are negotiating in good faith and are sure that a deal will be struck in time.
The annual accounting technique of raising the debt ceiling typically happens without much attention. It merely permits the government to continue taking out loans to cover expenses that have already been paid for through the budget.
The Republican Party has made the decision to use the debt ceiling as leverage this year in an effort to persuade Biden to scale back his preferred Democratic spending plans.
