Amid growing concerns of a potential default by early June, the United States president Joe Biden and Republican Kevin McCarthy have reportedly reached an “agreement in principle” to raise the federal government’s multi-trillion dollar debt ceiling.
According to a May 28 report from Reuters, citing two sources familiar with the negotiations, the “tentative” agreement to raise the U.S. government’s $31.4 trillion debt ceiling was reached after a 90-minute phone call between Biden and McCarthy on May 27.
Following the publication of this article, Biden has since confirmed via Twitter the existence of an “agreement in principle,” explaining that it will prevent the U.S. facing a “catostrophic default.”
Biden noted that “over the next day” the agreement will go the U.S. House and Senate and urged both chambers to “pass the agreement right away.”
Earlier this evening, Speaker McCarthy and I reached a budget agreement in principle.
It is an important step forward that reduces spending while protecting critical programs for working people and growing the economy for everyone. And, the agreement protects my and…
— President Biden (@POTUS) May 28, 2023
McCarthy also confirmed the agreement in principle on Twitter, stating that Biden “wasted time and refused to negiotate for months.”
Reuters reported that while “the exact details of the deal were not immediately available,” an agreement has been made to limit the U.S. government’s spending for the next two years, excluding expenses related to national security.
“Negotiators have agreed to cap non-defense discretionary spending at 2023 levels for one year and increase it by 1% in 2025” a source familiar with the deal said.
This comes only weeks after U.S. Treasury Secretary Janet Yellen warned of a default risk as soon as June 1 if the debt limit isn’t suspended or raised, urging Congress to “as as soon as possible.”
Additionally, The U.S. Congressional Budget Office (CBO) published a report on May 12, emphasizing that if the debt limit remains unchanged, there is a significant risk “that at some point in the first two weeks of June, the government will no longer be able to pay all of its obligations.”
It was reported that the deal must pass through Congress before the Treasury “runs short of money.” It was warned on May 26 that a default will occur if the debt limit is not raised by June 5.
Update on May 28, 2023, at 03:15: This article has been updated to include United States President Joe Biden’s tweet.