Debt ceiling: White House, Republicans strike deal to avoid default; vote is Wednesday

WASHINGTON — Top White House and Republican negotiators on Saturday reached a deal in principle to raise the debt limit for two years, avoiding a catastrophic default that loomed in early June, House Speaker Kevin McCarthy told reporters.

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Update 10:11 p.m. EDT May 27: President Joe Biden tweeted that Saturday’s agreement in principle is “an important step forward.”

“The agreement represents a compromise, which means not everyone gets what they want,” Biden tweeted. “That’s the responsibility of governing. And, this agreement is good news for the American people, because it prevents what could have been a catastrophic default and would have led to an economic recession, retirement accounts devastated, and millions of jobs lost.”

Biden added that he strongly urged both chambers of Congress to “pass the agreement right away.”

The White House has invited House Democrats for a briefing, MSNBC reported.

Update 9:16 p.m. EDT May 27: House Speaker Kevin McCarthy told reporters during a brief news conference that “we still have a lot of work to do,” adding that a vote on the bill will be taken on Wednesday.

McCarthy added that the text of the agreement will be published on Sunday.

The speaker did not release any details about the deal, other than to say that there were “historic reductions in spending.”

McCarthy said that he spoke twice to President Joe Biden on Saturday.

“After weeks of negotiations, we have come to an agreement in principle,” McCarthy told reporters. “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.”

McCarthy added that there were no new taxes and no new programs.

Original report: The New York Times, quoting “three people familiar with the agreement,” said the deal will also cut and cap government spending over the next 24 months.

The compromise, which would freeze federal spending that had been projected to grow, had the blessing of both President Joe Biden and McCarthy, according to the newspaper. The deal now must go before Congress, which has a June 5 deadline to avoid the first default in U.S. history.

The people who spoke about the deal to the Times did so on the condition of anonymity because they were not authorized to comment publicly before a formal announcement.

CNN, also citing “multiple sources” familiar with the negotiations, also reported that a deal had been reached.

The deal also reportedly would impose new work requirements for some recipients of government aid, including food stamps and the Temporary Assistance for Needy Families program, according to the Times. It would put new limits on people 54 and older, but will expand food stamp access for veterans and the homeless, the newspaper reported.

Biden and House Speaker Kevin McCarthy spoke by telephone on Saturday, the Times reported.

The conversation between the president and speaker took place after U.S. Rep. Patrick McHenry, R-N.C., a lead negotiator in the talks, told reporters that the parties were either “hours or days” away from an agreement, according to the newspaper.

The marathon discussions continued after Treasury Secretary Janet Yellen told lawmakers on Friday that there was a June 5 deadline to act before the U.S. government ran out of money to pay its bills, The Washington Post reported.

A default would have sent the nation into a recession, according to the newspaper.

White House and congressional Republican negotiators worked around the clock as the Memorial Day weekend began, trying to reach a deal to raise the nation’s debt ceiling, according to the Times.

Work requirements for benefits had been a sticking point, with Republicans favoring that measure while the White House has been pushing back, The Wall Street Journal reported.

The country’s federal debt currently stands at $31.4 trillion.

Check back for more on this developing story.

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