Washington
CNN
—
The White House and House Republicans have an agreement in principle on a deal to raise the debt ceiling for two years and limit spending, House Speaker Kevin McCarthy confirmed Saturday, taking the nation a step back from the brink of a historic default.
President Joe Biden and McCarthy reached the agreement in principle during a phone call Saturday, a source familiar with their call said. Both leaders now face the daunting task of selling the deal to their allies in both chambers of Congress, where Republicans control the House and Democrats control the Senate. The deal must be approved by June 5, the crucial date when Treasury Secretary Janet Yellen says the US will no longer be able to pay its bills.
“After weeks of negotiations, we have reached an agreement in principle. We still have a lot of work to do, but I think this is an agreement in principle that is worthy of the American people,” McCarthy said during brief remarks to reporters.
“The deal protects key priorities and legislative accomplishments of myself and Democrats in Congress,” Biden said he said in a statement. “The agreement represents a compromise, which means that not everyone gets what they want. This is the responsibility of governing.”
If the deal ends up passing through Congress and signed into law by Biden before the so-called X date, the White House and House Republicans will have avoided an unprecedented economic crisis. A default by the US government, which has never happened, could lead to a global recession and the loss of millions of jobs, a scenario that was raised in the final hour of the holiday weekend negotiations.
The two-year deal would also push the next fight over raising the debt ceiling until after the 2024 election.
House GOP leaders briefed all members on the status of negotiations later in the evening, according to multiple sources familiar with the situation, and the text of the agreement will be reviewed overnight by both sides to ensure -se that conforms to the provisional agreement. The White House plans to brief Democrats on Sunday, according to a Democratic aide.
Despite the agreement in principle, new issuance could easily emerge every step of the way, and each step has the potential to be time-consuming, running out the clock before the debt deadline early next month. Strong opposition is expected from both the left and the right. That means it’s going to take some heavy hitting, and support from both sides of the aisle, to get the bill over the finish line.
McCarthy heard some immediate complaints from the more conservative members of his party. Rep. Bob Good, a member of the House Freedom Caucus, voiced his objections to the deal during the House GOP call Saturday night. He said he was disappointed with the deal and that they are raising the debt limit by more than the US would save under the plan, according to three watchdog sources. McCarthy detailed what he argued were the positive parts of the deal and asked him to come and talk about them.
Rep. Scott Perry of Pennsylvania, leader of the House Freedom Caucus, also expressed concern about the call, but other conservatives seemed more optimistic, including Rep. Jim Jordan of Ohio, one of the sources said.
The deal, in principle, will lift the debt ceiling for two years and cap non-defense spending roughly at current fiscal year levels through 2024 and increase it by 1 percent in fiscal 2025, according to a source familiar with the negotiations.
As part of the deal, the White House also appears to have made concessions to House Republican negotiators on work requirements for people receiving food stamps.
The agreement reached Saturday sets food stamp time limits for people up to age 54 that will then expire in 2030, while exempting veterans and the homeless from those limits, according to this source. The program’s current work requirement, formally called the Supplemental Nutrition Assistance Program, or SNAP, only applies to certain adults between the ages of 18 and 49.
The deal makes no changes to Medicaid and prevented certain changes to the Temporary Assistance for Needy Families (TANF) program sought by Republicans, according to this person.
A source with knowledge of the negotiations told CNN on Saturday that a provision to impose new work requirements for certain social safety net programs had remained a final sticking point. Republicans had been pushing the issue hard, saying that recipients of programs such as food stamps who do not have dependents should be forced to follow new rules. Democrats, however, had presented this idea as an attack on poor people.
McCarthy told reporters Saturday evening that he expects the House to vote Wednesday on the deal reached with the White House. McCarthy said negotiators will continue to work Saturday night to write the legislative text and that he expects to speak again with Biden on Sunday afternoon before the final legislative text is released Sunday.
House Republicans distributed a fact sheet detailing the debt limit deal to House and Senate Republicans on Saturday night after announcing the deal, according to two sources with direct knowledge of the document.
The fact sheet says the deal will reduce spending year-on-year and set a top line number of 1% for the next six years with 1% growth. It also includes SNAP and TANF work requirements.
The bill would include an administrative payback provision to require Biden to find offsets for rules and regulations that increase federal spending. It would reduce the fiscal year 2023 funding request for new IRS agents and restore tens of billions in unspent funds intended to combat the Covid-19 pandemic.
The pressure on negotiators is intense as the US moves ever closer to the possibility of default and the threat of economic catastrophe.
In a major development Friday that will give lawmakers more time to reach and approve a deal, Treasury Secretary Janet Yellen said Congress must address the debt ceiling by June 5 or the government will not have enough funds to pay all the nation’s obligations in full. and time Yellen had previously estimated that the earliest date a default could occur was June 1.
McHenry said Yellen’s new date “clarifies that our timeline is very tight.”
“House Republicans asked for clarification. Chip Roy and Matt Gaetz and Byron Donalds and Dan Bishop, among others, asked for clarification on Secretary Yellen’s math. She updated her math. It was obviously a good request . And I think it clears up our window for us to actually get the deal done,” he said Saturday.
Debt limit predictions, however, are unclear. Rather than a deadline set in stone, it’s more of a rough estimate, making it harder to know exactly how much time Congress has to act to avert potential financial catastrophe.
This story has been updated with additional information.
