US President Joe Biden (right) and Kevin McCarthy (left), the top Republican in Congress, reached a tentative deal to avert a possible default catastrophe on debt Credit: Saul Loeb/AFP
Congressional leaders are aiming to avert a default on government debt this week after a major breakthrough in budget talks between Joe Biden and the Republicans.
On Saturday, the president reached an agreement with Republican House Speaker Kevin McCarthy that would raise the federal government's borrowing limit while cutting spending.
But to avoid a default, then lawmakers still need to pass legislation in the House on Monday and The Senate, which is led by parties with a negligible majority.
Already, key figures from both Biden's Democratic Party and Republicans have expressed anger at the concessions each side will have to make to pass the bill.
In a warning frame, Chip Roy, a Republican member of the House of Representatives, tweeted : “I don't like the 'deal' as I understand it from the support team… I'll have more information when I see more details.” /p>
I don't like the “deal” as I understood from the support group… I'll have more info when I see the details.
— Chip Roy (@chiproytx), May 28 2023
Experts warn that late passage of the law could spell disaster for global markets.
If lawmakers do not raise the debt ceiling, currently set at $31 trillion (£25 trillion), the US will be forced to announce default on debt payments, which could lead to a global recession.
Janet Yellen The US Treasury Secretary has warned that the US will default on June 5 if no action is taken. She urged lawmakers to act quickly after Saturday's deal.
Mr. Biden insisted that the agreement reached with Mr. McCarthy was “a compromise, meaning not everyone gets what they want.”
Mr. McCarthy added: “I believe that this agreement is in principle worthy of the American people.”
The draft text of the agreement in legislative form was due to be published on Sunday, and Mr. McCarthy said he expected to put it to a vote in the House of Representatives on Wednesday.
It is thought that the Senate, which is narrowly controlled by Democrats, may consider it later this week.
At the center of the agreement is a two-year budget deal that will keep spending flat in 2024 and 2025 increase by 1% in exchange for a two-year increase in the debt limit, postponing the volatile political issue until the next presidential election.
0405 US Government Net Debt
The agreement would have imposed stricter age limits on people claiming government unemployment benefits, but Biden was able to secure the release of veterans and the homeless.
The parties also agreed on an ambitious revision of federal permitting rules to speed up the construction of energy facilities.< /p>
The focus will now be on getting the deal passed in both legislative houses so it can be signed into law. President.
McCarthy has only a small Republican majority in the House of Representatives, backed by far-right conservatives who may resist any deal as small as spending cuts.
By compromising with Democrats over votes, he risks lose the support of its rank and file members, thus creating a difficult career moment for the new speaker, who changed the gavel in January.
Legislators must act fast. On Wall Street, investors became nervous about a possible default, and the last time such a crisis was averted in 2011, the fiasco led to a downgrade of the US credit rating.
Ralph Norman, another Republican in the House of Representatives, tweeted, “This 'deal' is crazy. Raising the debt ceiling [by $4 trillion] with virtually no cuts is not what we agreed on.
“Let's not vote to bankrupt our country. The American people deserve better.”
This “deal” is crazy.
Increasing the debt ceiling by $4 trillion with virtually no cuts is not what we agreed to.
I will not vote for the bankruptcy of our country. The American people deserve better.
— Rep. Ralph Norman (@RepRalphNorman) May 28, 2023
Mr. McCarthy told Fox News, “Maybe it doesn't do everything for everyone. But it's a step in the right direction that no one expected today.
“This is a good bill for the American public.”