Biden, McCarthy reach 2-year US debt limit deal to avert crisis

WASHINGTON — President Biden and House Speaker Kevin McCarthy reached an “agreement in principle” to raise the nation’s legal debt ceiling late Saturday as they raced to strike a deal to limit federal spending and resolve a looming crisis ahead of a June 5 deadline, the House speakers said.

The deal would avert a catastrophic US default, but it also risks angering both Democratic and Republican sides with the concessions made to reach it. Negotiators agreed to some Republican demands for enhanced work requirements on recipients of food stamps that had sparked an uproar from House Democrats as a nonstarter.

Support from both parties will be needed to win congressional approval.

The Democratic president and Republican speakers reached the agreement after the two spokes earlier Saturday evening by phone, said McCarthy. The country and the world have been watching and waiting for a resolution to a political standoff that threatens the US and global economies.

With the outlines of a deal in place, the legislative package could be drafted and shared with lawmakers in time for votes early next week in the House and later in the Senate.

Central to the package is a two-year budget deal that would hold spending flat for 2024 and impose limits for 2025 in exchange for raising the debt limit for two years, pushing the volatile political issue past the next presidential election.

Biden also spoke earlier in the day with Democratic leaders in Congress to discuss the status of the talks, according to three people familiar with the situation, who spoke on condition of anonymity because they were not authorized to discuss the matter publicly.

The Republican House speakers had gathered top allies behind closed doors at the Capitol as negotiators pushed for a deal that would raise the nation’s borrowing limit and avoid a first-ever default on the federal debt, while also making spending cuts that House Republicans are demanding.

As he arrived at the Capitol early in the day, McCarthy said that Republican negotiators were “closer to an agreement.”

McCarthy’s comments had echoed the latest public assessment from Biden, who said Friday evening that bargainers were “very close.” Biden and McCarthy last met face-to-face on the matter Monday.

Their new discussion Saturday by phone came after Treasury Secretary Janet Yellen told Congress that the United States could default on its debt obligations by June 5 — four days later than previously estimated — if lawmakers did not act in time to raise the federal debt ceiling. The extended “X-date” gave the two sides a bit of extra time as they scramble for a deal.

Both sides have suggested one of the main holdups was a GOP effort to expand existing work requirements for recipients of food stamps and other federal aid programs, a longtime Republican goal that Democrats have vigorously opposed. The White House said the Republican proposals were “cruel and senseless.”

They also had appeared to still be laboring over a compromise on federal permitting changes that would ease regulations for developing oil, gas and renewable energy projects and fostering new transmission line connections.

McCarthy, who dashed out before the lunch hour Saturday and arrived back at the Capitol with a big box of takeout, declined to elaborate on those discussions. One of his negotiators, Louisiana Rep. Garret Graves, said there was “not a chance” that Republicans might be relevant on the work requirements issue.

Americans and the world were uneasy watching the negotiating brinkmanship that could throw the US economy into chaos and sap world confidence in the nation’s leadership. House negotiators left the Capitol at 2 am the night before, only to return hours later.

Failure to lift the borrowing limit, now $31 trillion, to pay the nation’s incurred bills, would send shockwaves through the US and global economy. 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.”

Anxious retirees and others were already making contingency plans for missed checks, with the next Social Security payments due next week.