Joe Biden and Kevin McCarthy reach ‘agreement in principle’ on raising US debt ceiling | US News

President Joe Biden and House Speaker Kevin McCarthy have reached an “agreement in principle” on raising the U.S. debt ceiling, according to sources in Washington.

The preliminary agreement would end a months-long standoff between the Republican-controlled Congress and the Democratic-controlled White House.

The debt ceiling is currently at $31.4tn (£25.4tn), and a new ceiling has yet to be announced.

Mr. Biden and Mr. McCarthy held a 90-minute call Saturday night to discuss the deal as the June 5 deadline loomed.

After the conversation, the spokesperson tweeted: “Just spoke to the President on the phone.

“After months of wasting his time and refusing to negotiate, we have reached in principle a deal worthy of the American people.”

In a very brief news conference on Capitol Hill, Mr. McCarthy said they “still have more work to do tonight to finish drafting the bill,” adding that he expects to finish drafting the bill on Sunday. Drafting, then a vote on Wednesday.

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The deal would avoid an economically destabilizing default, as long as they manage to get through a narrowly divided Congress before the Treasury runs short on funds to meet all of its obligations.

Republicans have pushed for deep spending cuts and other conditions, including new work requirements for some benefit programs for low-income Americans and stripping funding from the Internal Revenue Service, the U.S. tax agency.

They said they wanted to slow the growth of U.S. debt, which is roughly equal to the annual output of the country’s economy.

Specific details of the deal were not immediately released, but negotiators have agreed to cap non-defense discretionary spending at 2023 levels for two years in exchange for raising the debt ceiling over the same period, Reuters reported.

The impasse has spooked financial markets, weighing on stock markets and forcing the U.S. to pay record high interest rates on some bond issues.

Economists say a default would be far more costly, potentially pushing the U.S. into recession, destabilizing the world economy and sending unemployment soaring.

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