Amid growing concerns of a possible default in early June, US President Joe Biden and Republican Kevin McCarthy reportedly reached an "agreement in principle" to raise the multitrillion-dollar debt ceiling. of the federal government.
According to a May 28 report According to Reuters, citing two sources familiar with the negotiations, the "tentative" deal to raise the US government's debt ceiling to $31.4 trillion was reached after a 90-minute phone call between Biden and McCarthy on may 27th.
Following the publication of this article, Biden has since confirmed via Twitter the existence of a "deal in principle", explaining that it will prevent the US from facing a "catastrophic default".
Biden noted that "the next day" the deal will go to the US House of Representatives and Senate and urged both chambers to "approve the deal immediately."
This afternoon, President McCarthy and I reached a preliminary budget agreement.
It's an important step forward that reduces spending while protecting critical programs for workers and growing the economy for everyone. And, the agreement protects my and...
โ President Biden (@POTUS) May 28, 2023
Reuter's reported that while "exact details of the agreement were not immediately available," an agreement has been reached to limit US government spending for the next two years, excluding spending related to national security.
"Negotiators agreed to limit discretionary non-defense spending to 2023 levels for two years, in exchange for an increase in the debt ceiling for a similar period," according to the sources.
This comes just weeks after US Treasury Secretary Janet Yellen warned of a risk of default as early as June 1 if the debt limit is not suspended or raised, urging Congress "as soon as possible."
In addition, the US Congressional Budget Office (CBO) released a report on May 12, emphasizing that if debt the limit remains unchangedthere is a significant risk "that at some point in the first two weeks of June, the government will no longer be able to pay all of its obligations."
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One of the sources reportedly emphasized that the "deal in principle" still has some components to finalize, stating:
"But I'm not sure it's fully resolved. There may be one or two small things that need to finish. But close enough to move on."
It was reported that the deal must go through Congress before the Treasury "runs out of money." It was warned on May 26 that a default will occur if the debt limit is not raised by June 5.
Update May 28, 2023 03:15: This article has been updated to include the tweet from the President of the United States, Joe Biden.
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