US President Joe Biden described reaching a preliminary agreement on raising the government debt ceiling with Republicans as a consensus and an important step forward, while Republican House Speaker Kevin McCarthy described the agreement as including historic cuts in government spending.
The US president welcomed the initial agreement to raise the federal government's $31.4 trillion debt ceiling, but said the initial agreement "does not achieve each side's goal in full, but it will maintain the top priorities of the Democrats."
Biden added that the consensus would prevent "catastrophic defaults leading to economic recession, destruction of retirement accounts and the loss of millions of jobs," adding that "this is the responsibility of governance."
McCarthy pointed to concrete reforms that would lift people out of poverty (Reuters)
McCarthy Comments
The speaker of the US House of Representatives said Republican negotiators had reached a preliminary agreement with the White House to resolve the government debt ceiling problem.
He added that the agreement includes historic spending cuts and does not include any new taxes or programs, pointing to concrete reforms that lift people out of poverty.
He said he would present the initial agreement to members of Congress to complete the text editing and review it with the White House, adding that a vote on the bill was expected next Wednesday.
Difficult path
The agreement reached by President Biden and McCarthy ended a months-long crisis, yet the agreement was announced without any ceremony - according to Reuters - and in terms that reflect the bitter content of the negotiations and the difficult path that the agreement will go through in Congress.
The agreement, a breakthrough following long and intense negotiations between the two sides, came ahead of the June 5 deadline set by Treasury Secretary Janet Yellen.
The agreement raises the debt ceiling for two years and cuts spending over the same period, recovering funds that were intended to fight the COVID-19 pandemic that were not used; speeding up the approval process for some energy projects and some additional working conditions for food aid programs for poor Americans.
A source familiar with the negotiations said a deal to raise the $31.4 trillion federal government debt ceiling would keep non-defense spending stable for the current and upcoming fiscal years 2024, adding that there were no budget caps beyond 2025.
The challenge is to get the Congress, made up of the Republican and Senate (Democratic), to vote quickly to raise the public debt ceiling or the US could be in default, an unprecedented situation with potentially catastrophic economic, financial, and social repercussions.