House Speaker Kevin McCarthy announced Saturday that he and President Joe Biden had reached an agreement in principle to raise the debt ceiling days before a possible default, marking a major break in a months-long impasse on the matter.
“After weeks of negotiations, we have reached an agreement in principle,” McCarthy told reporters late Saturday. “We still have a lot of work to do, but I believe this is a fundamental agreement worthy of the American people.”
With the agreement, which came after Biden and McCarthy’s talk on Saturday night, both leaders are expected to save face in true Washington style. While Biden was able to protect most of his legislative gains, McCarthy could still brag that he used the debt ceiling to cut spending. And Americans could avoid a costly and unprecedented default.
For months, Republicans in the House of Representatives and the White House have been arguing about the debt ceiling and whether it should be linked to spending cuts. Although the White House initially took a no-negotiation position and said it would not allow Republicans to “hold the economy hostage,” Biden eventually came to the table after the House of Representatives approved a debt ceiling hike that was coupled with spending cuts , which was not worth it for Democrats – and how the Treasury Department warned of a possible default in early June.
Debt ceiling cartoons
McCarthy noted that the agreement would include “historic spending cuts,” reforms that “pull people out of poverty into the workforce,” and would not involve any new government programs or new taxes.
However, he also made it clear that much remains to be done. Republicans in the House of Representatives were briefed Saturday night while the text of the bill was still being written. McCarthy said he expects the text of the law to be released on Sunday and for the House to vote on Wednesday. Once passed, the bill would go to the Senate.
There is little time for an agreement after Treasury Secretary Janet Yellen announced on Friday that the government is likely to run out of money to pay its bills on June 5.