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White House, Republicans Reach Debt Limit Deal to Avoid Catastrophic Default

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Negotiators for Democratic President Joe Biden and Republican House Speaker Kevin McCarthy have reached a tentative deal to raise the United States debt ceiling for two years while also cutting federal spending.

Top negotiators for the White House and Republicans reached the agreement on Saturday to raise the debt limit, a breakthrough after weeks of tense talks that came just days ahead of the deadline, sources confirmed to The New York Times. The sources who confirmed the deal to The New York Times did so on the condition of anonymity because they were not authorized to comment publicly. The White House has not formally announced the agreement.

U.S. President Joe Biden meets with House Speaker Kevin McCarthy (R-CA) in the Oval Office of the White House on May 22, 2023 in Washington, DC. Biden and McCarthy were meeting to discuss raising the debt limit in an effort to avoid a default by the federal government. The White House and Republicans reached a deal on Saturday, according to The New York Times.
Drew Angerer/Getty

If Democrats and Republicans did not strike a deal and failed to raise the $31.5 trillion debt limit, the U.S. faced defaulting for the first time in history. The Treasury cautioned lawmakers that it could run out of money to pay bills by early June, a dire predicament that economic experts warned would have had catastrophic consequences for the national and global economies.

Newsweek reached out via email to Biden and McCarthy representatives for comment.

Newsweek previously reported that under the proposed deal, the debt limit would be raised for two years while implementing strict caps on discretionary spending. The proposal likely includes some climate attributes, such as renewable energy projects, a goal of the Biden’s administration. The deal can also be seen as a win for McCarthy and Republicans because they have been demanding spending cuts and strict caps imposed on discretionary spending that is not related to the military or veterans.

However, the deadline still looms as Congress must now pass the plan before the June 5, the date the Treasury says the government will run out of money. Support for the proposal is not assured in the Republican-controlled House nor the Democratic-led Senate, where lawmakers from both parties will likely have issue with aspects of the agreement. Republicans wanted even more cuts whereas Democrats wanted the debt limit to be raised without preconditions.

Biden, McCarthy and other Congressional leaders have maintained that a default is off the table. They have been working to end the stalemate for weeks, talking as recently as Saturday evening to hammer out the final points, according to The New York Times.

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