U.S. President Joe Biden on Sunday finalized a budget agreement with House Speaker Kevin McCarthy to suspend the $31.4 trillion debt ceiling until January 1, 2025, and said the deal was ready to move to Congress for a vote.
“This is a deal that’s good news for … the American people,” Biden told reporters at the White House after a call with McCarthy to put the final touches to a tentative deal they struck on Saturday night.
“Good news,” Biden declared Sunday evening at the White House, noting that “it takes the threat of catastrophic default off the table, protects our hard-earned and historic economic recovery.”
The deal, if approved, will prevent the U.S. government from defaulting on its debt and comes after weeks of heated negotiations between Biden and House Republicans.
It still needs to pass through a narrowly divided Congress before June 5, when the U.S. Treasury says it would run short of money to cover all of its obligations.
In the United States, a default could cause financial markets to freeze up and spark an international financial crisis. Analysts say millions of jobs would vanish, borrowing and unemployment rates would jump, and a stock-market plunge could erase trillions of dollars in household wealth. It would all but shatter the $24 trillion market for Treasury debt.
‘A divided government’
The deal has drawn fire from hardline Republicans and progressive Democrats, but Biden and McCarthy are banking on getting enough votes from both sides.
McCarthy earlier on Sunday predicted he would have the support of a majority of his fellow Republicans, and House Democratic leader Hakeem Jeffries said he expected Democratic support.
The agreement would suspend the debt limit through January 1, 2025, cap spending in the 2024 and 2025 budgets, claw back unused COVID-19 funds, speed up the permitting process for some energy projects and include extra work requirements for food aid programs for poor Americans.
The 99-page bill would authorize more than $886 billion for security spending in fiscal year 2024 and over $703 billion in non-security spending for the same year, not including some adjustments. It would also authorize a 1 percent increase for security spending in fiscal year 2025.
Senate Republican Leader Mitch McConnell applauded the agreement and called on the Senate to act swiftly to pass it without unnecessary delay once it has gone through the House.
While, members of the Republican hardline Freedom Caucus said they would try to prevent the agreement from passing in a House vote expected on Wednesday.
“We’re going to try,” Representative Chip Roy, a prominent Freedom Caucus member, said in a tweet.
McCarthy told reporters at the Capitol on Sunday that the agreement “doesn’t get everything everybody wanted,” but that was to be expected in a divided government. Privately, he told lawmakers on a conference call that Democrats “got nothing.”
