Speaker of the House of Representatives Kevin McCarthy said today that the White House and Republicans have reached an agreement in principle on a deal that will raise the debt ceiling for two years and limit spending, bringing the United States back from the brink of a historic default.
A source with knowledge of the meeting said the agreement in principle was reached during a phone call Saturday by Presidents Joe Biden and McCarthy.
The reaction of Bitcoin (BTC) after the announcement of the agreement in principle:
Now both leaders face the difficult task of getting their allies in both houses of Congress to accept the deal, where Republicans control the House of Representatives and Democrats control the Senate.
The deal must be adopted before June 5, the critical date when Treasury Secretary Janet Yellen said the United States could no longer pay its bills.
In a brief statement to reporters, McCarthy said:
“After weeks of negotiations, we reached an agreement in principle. We still have a lot of work to do, but I believe this is an agreement in principle worthy of the American people."
Biden said in a statement, "The agreement protects my and Congress Democrats' key priorities and legislative achievements."
"The deal is a compromise, which means that not everyone gets what they want. That's a management responsibility."
The two-year deal will also delay the next challenge to raise the debt ceiling until after the 2024 elections.
House Republican leaders briefed all members on the status of negotiations in the evening, and the text of the agreement will be reviewed by both parties overnight to ensure it aligns with the interim agreement, according to multiple sources with knowledge of the matter. The White House plans to notify Democrats on Sunday, according to a Democratic source.
McCarthy immediately received some complaints from the most conservative members of his party. Representative Bob Good, a member of the House Freedom Group, voiced his opposition to the deal during Saturday night's House Republican Party meeting.
Good said he was disappointed with the deal and increased the debt limit more than the US could save under this plan, according to three sources who attended the call.
What are the Details of the Agreement?
According to a source familiar with the negotiations, the agreement in principle will raise the debt limit for two years and bring non-defense spending roughly to current fiscal year levels for 2024 and increase it by 1% in fiscal 2025.
As part of the deal, the White House also appears to have made concessions to Republican House of Representatives negotiators on the working conditions of food aid recipients.
The deal, reached on Saturday, will phase out the food aid time limit for people up to 54 that will expire in 2030, while exempting veterans and the homeless, according to the source. Officially called the Supplementary Nutrition Assistance Program, or SNAP, the current employment requirement for the program only applies to certain adults aged 18-49.
McCarthy told reporters on Saturday evening that he expects the agreement reached with the White House to be voted on in the House of Representatives on Wednesday. McCarthy said negotiators will continue to work on writing the legislative text on Saturday night and expects to speak with Biden again on Sunday afternoon before the final legislative text is published on Sunday.
*Not investment advice.