White House, Republicans Reach Tentative Debt Limit Deal to Avoid Default

Democratic President Joe Biden and Republican House Speaker Kevin McCarthy have reached a tentative deal to raise the United States debt ceiling for two years while also cutting federal spending.

Top negotiators for the White House and Republicans reached the agreement on Saturday to raise the debt limit, a breakthrough after weeks of tense talks that came just days ahead of the deadline, Biden and McCarthy confirmed on Saturday night.

Following a phone call between the two leaders, the speaker said they came to an agreement but did not share exact provisions.

"After weeks of negotiations we have come to an agreement in principle," McCarthy told reporters Saturday night. "We still have a lot of work to do but I believe this is an agreement in principle that is worthy of the American people."

Biden shared the news on Twitter shortly after McCarthy, where the president called the deal an "important step forward" but admitted it was a "compromise."

If Democrats and Republicans did not strike a deal and fail to raise the $31.5 trillion debt limit, the U.S. faces defaulting for the first time in history. The Treasury has cautioned lawmakers that it could run out of money to pay bills by early June, a dire predicament that economic experts warned would have had catastrophic consequences for the national and global economies.

Newsweek reached out via email to Biden and McCarthy representatives for comment.

"It is an important step forward that reduces spending while protecting critical programs for working people and growing the economy for everyone," Biden said on Twitter. "And, the agreement protects my and Congressional Democrats' key priorities and legislative accomplishments. The agreement represents a compromise, which means not everyone gets what they want. That's the responsibility of governing."

Biden said the agreement is good news for Americans because it prevents a "catastrophic default."

"I strongly urge both chambers to pass the agreement right away," he said in the tweet.

McCarthy also shared news of the agreement on his Twitter account where he slammed the president for waiting to negotiating for months but said they have finally come to an agreement "in principle" that is "worthy."

"I just got off the phone with the president a bit ago. After he wasted time and refused to negotiate for months, we've come to an agreement in principle that is worthy of the American people," the California Republican said on Twitter.

He told reporters that he would not release details of the agreement until lawmakers had a chance to be briefed. McCarthy said that bill will be available to the public on Sunday and the House will vote on Wednesday.

McCarthy said the plan has "historic reductions in spending, consequential reforms that will lift people out of poverty into the workforce, reign in government overreach, there are no new taxes. No new government programs."

In another tweet, McCarty praised the deal as a "responsible debt limit agreement."

"Republicans are poised to deliver big, consequential change in Washington," he said. "Soon, we will vote for a responsible debt limit agreement that stops Democrats' reckless spending, claws back unspent COVID funds, blocks Biden's new tax schemes, & much, much more."

Newsweek previously reported that under the proposed deal, the debt limit would be raised for two years while implementing strict caps on discretionary spending. The proposal likely includes some climate attributes, such as renewable energy projects, a goal of the Biden's administration. The deal can also be seen as a win for McCarthy and Republicans because they have been demanding spending cuts and strict caps imposed on discretionary spending that is not related to the military or veterans.

However, the deadline still looms as Congress must now approve the proposal before the June 5, the date the Treasury says the government will run out of money. Support for the plan is not assured in the Republican-controlled House nor the Democratic-led Senate, where lawmakers from both parties will likely have issues with aspects of the agreement. Republicans wanted even more cuts whereas Democrats wanted the debt limit to be raised without preconditions.

Biden, McCarthy and other Congressional leaders have maintained that a default is off the table. They have been working to end the stalemate for weeks, talking as recently as twice on Saturday to hammer out the final points. McCarthy said he will talk with the president again on Sunday.