Biden and Republicans’ preliminary agreement to avoid a disastrous default reaches Congress

WASHINGTON (AP) — President Joe Biden and House Speaker Kevin McCarthy reached an “understanding in principle” to raise the country’s debt limit, but now Congress must rush to pass the spending cut package in a matter of days to avoid a federal default that could prove disastrous.

However, the agreement risks provoking rejection by Democrats and Republicans for the concessions made to achieve it. Negotiators agreed to some of the Republican demands to increase work requirements for food stamp recipients, which had sparked outrage from House Democrats. However, they fell short of granting the sweeping cuts that the Republicans wanted.

It will take bipartisan support to win congressional approval next week before the estimated date the United States would default on June 5.

The Democrat Biden and the Republican McCarthy reached the agreement after a telephone conversation on Saturday afternoon. The country and the world were closely following the negotiations awaiting a resolution to a political confrontation that threatened the economy of the United States and the world.

“The agreement represents trade-offs, which means that not everyone gets what they want,” Biden said in a statement released Saturday night. “That is the responsibility of governing.”

Biden called the deal “good news for the American people, because it prevents what would have been a catastrophic default and would have led to an economic downturn, devastated account retirements and the loss of millions of jobs.”

In brief remarks on Capitol Hill, McCarthy said that “we still have a lot to do.”

But the legislator added: “I think this agreement in principle is worthy of the American people.”

Once the framework of the agreement is reached, it could be drafted and shared with lawmakers in time for a vote starting Wednesday in the House of Representatives and later in the Senate.

One of the most important pieces is a two-year budget agreement that would keep spending stable through 2024 and limit its increase to 1% by 2025 in exchange for later raising the debt limit for two years, which would postpone the sensitive political issue. until after the next presidential elections.

Republicans, who fought hard to impose stricter labor requirements for government aid, got some but not all of what they wanted. The agreement would limit access to food stamps to able-bodied adults ages 49 to 54, but Biden secured exemptions for veterans and the homeless.

An ambitious agreement was also reached on a review of federal permits to facilitate the development of energy projects. Instead, the agreement introduces changes to the National Environmental Policy Law, which will designate “a single lead agency” in charge of environmental reviews, hoping to streamline the process.

The agreement came after Treasury Secretary Janet Yellen told Congress that the United States could default on its debt obligations on June 5 – four days later than previously estimated – if lawmakers did not act in time to raise the federal debt limit. Raising the debt ceiling, which is now $31 trillion, allows more money to be borrowed to pay existing government bills.

Biden also met with Democratic congressional leaders on Saturday to discuss the status of negotiations. The White House was scheduled to brief House Democrats in a video call on Sunday.

McCarthy leads a slim Republican majority in the House buoyed by hardline conservatives who may resist any deal, saying it doesn’t cut enough spending. But by seeking a compromise with Democrats to get enough votes, he risks losing support among his ranks, posing a defining moment for the new House speaker’s career.

The two sides have hinted that one of the main obstacles to reaching a deal were Republican efforts to increase work requirements for people who receive food stamps and other federal aid, a long-standing Republican goal that has been strongly opposed by Democrats. . The White House called the Republican proposals “cruel and senseless.”

Biden has said that requiring Medicaid recipients to have jobs was non-negotiable. He seemed more open to negotiating changes to food stamps, known as the Supplemental Nutrition Assistance Program, or SNAP, despite objections from Democratic lawmakers.

Americans and the rest of the world were anxiously following the negotiations, which could plunge the economy into chaos and undermine confidence in the country’s leadership.

Retirees and other concerned people were already making contingency plans in case their checks didn’t arrive, as the next Social Security payment was scheduled for the following week.

Yellen said failure to take action before the new deadline would “cause severe hardship for American families, damage our global leadership position, and raise questions about our ability to defend our national security interests.”

Any deal will have to be a political compromise in a divided congress. Many of the more conservative Trump-friendly Republicans have long been skeptical of the Treasury estimates and are pressing McCarthy to stand his ground.

Lawmakers are not expected to return from the Memorial Day holiday before Tuesday, at the earliest, and McCarthy has promised lawmakers he will abide by the rule of publishing any bill 72 hours before voting on it.

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Associated Press writers Stephen Groves, Fatima Hussein, Farnoush Amiri, Seung Min Kim and video reporter Rick Gentilo contributed to this report.