The White House and Republican representatives have reached an agreement on raising the US debt ceiling after weeks of negotiations.
President Joe Biden said the agreement represents “a compromise” between the Democrats and Republicans but hailed it as “good news for the American people” as failure to agree would have resulted in an unprecedented US government default.
The US Treasury Department had warned the federal government could be unable to pay all its bills by as soon as 1 June - just under a week away - and any deal must pass through a divided Congress before it can take affect.
The Republicans hold a majority in the House of Representatives while the Democrats narrowly control the Senate.
Little is known about the deal but CBS reports that non-defence government spending would be kept flat for two years and then rise by 1 per cent in 2025. Medicaid health insurance is not believed to have been impacted.
At a brief press conference late on Saturday, House Speaker Kevin McCarthy said he had spoken to President Biden on the phone twice during the day.
“And after weeks of negotiations, we have come to an agreement in principle. We still have a lot of work to do, but I believe this is an agreement in principle that’s worthy of the American people.
“It has historic reductions in spending, consequential reforms that will lift people out of poverty into the workforce, rein in government overreach, there are no new taxes, no new government programs, there’s a lot more within the bill,” he said.
Mr McCarthy said he will finish writing the bill on Sunday before it is put before a Congressional vote on Wednesday
Both sides have suggested one of the main holdups was a GOP effort to expand work requirements for recipients of food stamps and other federal aid programs, a longtime Republican goal that Democrats have strenuously opposed. The White House said the Republican proposals were “cruel and senseless.”
