House Republicans and the White House have reached a preliminary agreement to raise the nation’s debt limit, according to sources familiar with the matter.
House Speaker Kevin McCarthy (R-CA) announced the deal and will make a statement Saturday night.
I just talked to the president a little while ago. After wasting time and refusing to negotiate for months, we have reached an agreement in principle that is worthy of the American people.
I will make a statement at 9:10 PM ET. Watch here: https://t.co/vmn31INPH5
— Kevin McCarthy (@SpeakerMcCarthy) May 28, 2023
“I just talked to the president a little while ago,” McCarthy wrote on Twitter. “After he wasted his time and refused to negotiate for months, we have reached an agreement in principle that is worthy of the American people. I will make a statement at 9:10 p.m. ET.”
The deal comes as Treasury Secretary Janet Yellen warned that not raising the debt limit would lead to serious difficulties. Yellen, in a letter to Congress, extended the debt ceiling deadline until June 5, highlighting the use of extraordinary measures to maintain the country’s financial position. The government could default as soon as a week from Monday.
House Speaker Kevin McCarthy acknowledged the urgency of the situation, saying negotiations with President Joe Biden to curb federal spending and raise the debt limit were at a critical stage. The two sides have been working on a two-year deal that would limit spending and extend the debt limit beyond the next presidential election. However, differences remain, particularly regarding the work requirements of government aid recipients.
Lawmakers left for the Memorial Day weekend, leaving retirees anxious and social service groups worried about a potential breach. International Monetary Fund Managing Director Kristalina Georgieva stressed the importance of finding a solution, referring to the situation as the “twelfth hour”.
President Biden, while attending an event honoring the Louisiana State University women’s basketball team, expressed hope that a deal would be reached, citing one of his top negotiators. The negotiations involve discussions about spending cuts and raising the debt ceiling for two years to cover the country’s outstanding bills.
Despite the progress, the two sides remain divided in different provisions. The White House is resisting measures that could drive people into poverty or compromise their health care, while Republicans are reluctant to compromise work requirements for aid recipients. Also under consideration is the issue of defense spending and possible compromises on funding for the Internal Revenue Service.
House Republicans have faced pressure from both the right wing, which has urged them not to accept a deal, and former President Donald Trump, who has advised them to get a favorable deal. Democrats, on the other hand, are pushing President Biden to find a resolution.
If a deal is reached, it will need bipartisan support to pass Congress. Even if a deal is reached, House Speaker McCarthy has vowed to follow the 72-hour publication rule before voting, delaying the process until next week.
In the midst of these negotiations, the Fitch Ratings agency has placed the AAA credit rating of the United States on “rating watch negative”, warning of a possible downgrade. The White House continues to argue that deficits can be reduced by ending tax breaks for wealthier households and businesses, while McCarthy has ruled out raising taxes as a solution.
Also, House Democrats have signed off on a legislative “discharge” process to force a vote on the debt ceiling, but they need the support of at least five Republicans to move forward. It is highly likely that unspent COVID-19 funds, totaling about $30 billion, will be reallocated now that the pandemic emergency has officially ended.
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