US President Joe Biden and House Republican Majority Leader Kevin McCarthy have reached an interim agreement to raise the Federal Government’s debt ceiling to $31.4 trillion , putting an end to a stagnation of months. The Republican leader appeared before the media to announce it.
First modification:
It may be the beginning of the end of the deadlock in negotiations between US Republicans and Democrats to raise the debt ceiling. Some dialogues that had been going on for months with little success and whose delay threatened the future of the economy of the leading world power.
The leader of the Republican majority in the House of Representatives, Kevin McCarthy, appeared before the media to announce that his party and the president of the United States had finally reached an agreement in principle, although it seems that there are still several challenges ahead, since that it is not total and must pass the parliamentary procedure in the absence of nine days for the term to expire.
“Just got off the phone with the President a while ago. After he wasted his time and refused to negotiate for months, we have reached an agreement in principle that is worthy of the American people,” McCarthy tweeted.
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.
I’ll deliver a statement at 9:10pm ET. Watch here:https://t.co/vmn31INPH5
—Kevin McCarthy (@SpeakerMcCarthy) May 28, 2023
The agreement would raise the debt limit for two years and limit spending during that time, and includes some additional requirements for programs aimed at the poorest population.
A call to compromise in extremis
Biden and McCarthy held a 90-minute phone call Saturday night to discuss the deal.
“We still have work to do tonight to get it done,” McCarthy told reporters on Capitol Hill. McCarthy said he expects to finish writing the bill on Sunday, speak with Biden and vote on the deal on Wednesday.
The deal will avoid an economically destabilizing default, as long as they can get it through a deeply divided Congress before the Treasury Department runs out of money to cover all its obligations, something it warned Friday would happen if the ceiling on the treasury isn’t raised. debt before June 5.
Republicans, who control the House of Representatives, have pushed for slash spending and other conditions, including new work requirements in some benefit programs for low-income Americans and defunding the Internal Revenue Service. , the US tax agency.
They have also said they want to curb the growth of US debt, which currently equals roughly the annual output of the country’s economy.
President Biden tweeted that “this is an important step forward that reduces spending while protecting critical programs for workers and growing the economy for all. In addition, the agreement protects my top priorities and legislative achievements and those of Congressional Democrats.”
He further concluded that “the agreement represents a compromise, which means that not everyone gets what they want. That is the responsibility of governing.”
Earlier this evening, Speaker McCarthy and I reached a budget agreement in principle.
It is an important step forward that reduces spending while protecting critical programs for working people and growing the economy for everyone. And, the agreement protects my and…
—President Biden (@POTUS) May 28, 2023
Negotiators have agreed to limit discretionary non-defense spending to 2023 levels for one year and increase it to 1% in 2025, according to the sources.
An expensive agreement in principle that still has to go through several procedures
The two sides have to carefully thread the needle to find a compromise that can be passed by the House of Representatives, with a 222-213 Republican majority, and the Senate, with a 51-49 Democratic majority.
A senior member of the hardline House Freedom Caucus said they were in the process of gauging member sentiment and were unsure what the number of votes might be.
The prolonged stagnation spooked financial markets, weighing on stocks and forcing the United States to pay record interest rates on some bond sales. According to economists, a default would have much more serious consequences, likely to push the country into recession, shake the world economy and cause unemployment to rise.
For months, Biden refused to negotiate with McCarthy on further spending cuts, demanding that lawmakers first pass a “clean” debt ceiling increase, free of other conditions, and submit a 2024 budget proposal to counter his own. in March. Negotiations between Biden and McCarthy began in earnest on May 16.
The Democrats accused the Republicans of playing a dangerous trick with the economy. Republicans say the recent increase in government spending is fueling growth in US debt, which now roughly equals the economy’s annual output.
The last time the country came this close to default was in 2011, when Washington also had a Democratic president and Senate and a Republican-led House of Representatives.
Congress eventually avoided default, but the economy suffered severe shocks, including the first downgrade of the United States’ credit rating and a major stock sale.
with Reuters
