President Biden, House Speaker Kevin McCarthy strike tentative debt ceiling deal

President Biden and House Speaker Kevin McCarthy have struck a tentative deal to raise the debt ceiling on Saturday night, officials said, leaving only congressional approval to avoid a catastrophic US default.

The “agreement in principle” to raise the government’s immense $31 trillion debt ceiling concludes a months-long stalemate between the White House and House Republicans.

The tentative deal was revealed following a 90-minute phone call between Biden, who is currently at Camp David, and McCarthy, who is in Washington.

The deal would raise the debt limit for two years — extending the debt limit beyond the 2024 presidential election — in exchange for cutting government spending during the same period.

The deal would halt federal spending flat for 2024 and increase it by 1% for 2025.

“After weeks of negotiations we have come to an agreement in principle,” McCarthy told reporters Saturday night. “We still have a lot of work to do but I believe this is an agreement in principle that is worthy of the American people.”

While the exact provisions of the deal have not been released, 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 [and] no new government programs.

“There’s a lot more within the bill,” he added.

The writing of the bill will be completed and made available to the public on Sunday with a vote expected in the House on Wednesday, he said.

While McCarthy presented the deal as a conservative win, Biden touted the deal as a success for Democrats, although emphasizing that it is a “compromise” and “not everyone gets what they want,” ahead of a house and senate vote.

“It is an important step forward that reduces spending while protecting critical programs for working people and growing the economy for everyone,” Biden said in a statement. “And, the agreement protects my and Congressional Democrats’ key priorities and legislative accomplishments.”

“This agreement 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, retirement accounts devastated, and millions of jobs lost,” Biden added.

Biden had spoken earlier in the day with Democratic leaders in Congress to discuss the status of the talks.

Ahead of the deal, Treasury Secretary Janet Yellen said Friday afternoon the government won’t run out of money until June 5 — four days later than previously expected, relieving some pressure amid tense negotiations.

McCarthy must give members 72 hours to review a bill’s final language before calling a vote on it.

The 72-hour rule was one of the concessions that conservative holdouts demanded from McCarthy in January in return for the speaker’s gavel.

The two sides have to carefully thread the needle in finding a compromise that can clear the House, with a 222-213 Republican majority, and Senate, with a 51-49 Democratic majority.

Biden, who was spending part of the holiday weekend at Camp David, had been in constant talks multiple times a day with his negotiating team.

Before he left the White House Friday, he said he was “optimistic” that a deal was imminent.

During the contentious negotiations, Republicans demanded that any deal must cut federal spending in exchange for raising the debt ceiling.

Both Republicans and Democrats said one of the biggest holdups was the GOP’s efforts to expand existing work requirements for people on federal aid programs. While the White House denounced the provision as “cruel,” Democrats appear to have conceded to some Republican demands.

The tentative deal would create new requirements for some recipients of government aid, including food stamps and the Temporary Assistance for Needy Families program, a source familiar with the agreement told The New York Times.

It additionally includes measures to speed up environmental reviews of certain energy projects and cuts $10 billion in tax enforcement funding for the IRS.

The deal would change a landmark 1970s’ National Environmental Policy Act that will designate “a single lead agency” to develop environmental reviews, in hopes of streamlining the process.

The work requirements and the environmental review reforms were among the final details negotiators hashed out Saturday, according to the paper.

Failure to raise the borrowing limit would have catastrophic effects on the U.S. and global economy, and raise concerns about the country’s leadership, officials said.

Yellen said failure to act by the new date would “cause severe hardship to American families, harm our global leadership position and raise questions about our ability to defend our national security interests.”

The Democratic-held Senate was largely absent during negotiations, leaving the talks to Biden and McCarthy.

Senate Majority Leader Chuck Schumer of New York pledged to move quickly to send a compromise package to Biden’s desk.

Both sides failed to reach a deal for weeks, partly because the Biden administration resisted for months on negotiating with McCarthy, arguing that the country’s full faith and credit should not be used as political leverage.

With Post Wires