Following a lengthy phone conference on Saturday evening, US President Joe Biden and House Speaker Kevin McCarthy achieved a “tentative” deal on lifting the country’s debt ceiling and reducing federal government spending. However, the plan must be finalised and voted on by Congress before the government runs out of money to pay its debts.
“I believe this is a principled agreement worthy of the American people.” It features historic expenditure cuts, substantial reforms that will raise people out of poverty and into the working, and it reins in government overreach,” McCarthy told reporters.
“The agreement represents a compromise, which means that not everyone gets what they want,” stated Biden in a statement. “It is an important step forward in that it reduces spending while protecting critical programmes for working people and growing the economy for everyone.”
The House speaker stated that the draught bill contains “a lot more,” but that “we still have a lot of work to do,” refusing to answer questions until he tells his colleagues about the progress. Later on Saturday, an all-GOP House conference call on the status of negotiations was scheduled.
Biden and McCarthy spoke on the phone twice on Saturday, with one call lasting more than 90 minutes, in an attempt to reach an agreement. During these “extended discussions,” the “framework deal” was agreed, but the actual text has yet to be finalised, owing to concerns from conservative legislators in both the Republican and Democratic parties, Bloomberg said, citing people familiar with the talks.
McCarthy vowed to unveil the bill’s text on Sunday and expects to take a vote on May 31 – just days before the government is set to run out of money.
US Treasury Secretary Janet Yellen initially warned that her agency would run out of money by June 1, but indicated on Friday that her department will most likely be able to meet its obligations until June 5. Economists cautioned that if a deal is not made in time and the US defaults on even some of its payments, it may cause a market crash and harm faith in the dollar in the long run.
