Draft deal reached on debt ceiling
WASHINGTON: United States President Joe Biden and top congressional Republican Kevin McCarthy reached a tentative deal to suspend the federal government’s $31.4 trillion ($NZ51.9 trillion) debt ceiling yesterday, ending a monthslong stalemate.
However, the deal was announced without celebration, in terms that reflected the bitter tenor of the negotiations and the difficult path it has to pass through Congress before the United States runs out of money to pay its debts early next month.
‘‘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,’’ McCarthy tweeted.
Biden, in a statement, called the deal ‘‘an important step forward’’, saying: ‘‘The agreement represents a compromise, which means not everyone gets what they want. That’s the responsibility of governing.’’
The deal would suspend the debt limit through January of 2025, while capping spending in the 2024 and 2025 budgets, claw back unused Covid funds, speed up the permitting process for some energy projects and includes some extra work requirements for food aid programs for poor Americans.
McCarthy expects to finish writing the Bill today, then speak to Biden and have a vote on the deal on Thursday
The two men have to carefully thread the needle in finding a compromise that can clear the House, with a 222213 Republican majority, and Senate, with a 5149 Democratic majority — meaning it will need bipartisan support before the president can sign it.
Negotiators have agreed to cap nondefence discretionary spending at 2023 levels for one year and increase it by 1% in 2025, a source familiar with the deal said.
The deal will avert an economically destabilising default, so long as it succeeds in passing it through the narrowly divided Congress before the Treasury Department runs short of money to cover all its obligations, which it warned on Saturday would occur if the debt ceiling issue was not resolved by June 5. Republicans say they want to cut spending to slow the growth of the US debt, which is now roughly equal to the annual output of the country’s economy. Biden and Democrats have pushed to increase taxes on the wealthy and companies to shrink the debt while increasing spending on programmes like free community college. — Reuters