U.S. lawmakers are examining the details of an agreement to increase the country’s borrowing limit ahead of votes expected in the coming days, as both President Joe Biden and House Speaker Kevin McCarthy urge them to approve it.
The proposal includes waiving the existing $31.4 trillion debt ceiling until January 2025 and a two-year budget deal that keeps federal spending flat in the fiscal year starting in October and increases it by 1% in the following 12 months into 2025.
Other pieces of the compromise package include a reduction in the hiring of more agents at the country’s tax collection agency, a requirement that states return $30 billion in unspent coronavirus pandemic assistance to the federal government and extending from 50 to 54 the upper age bracket for those required to work in order to receive food aid.
Biden and McCarthy reached the agreement late Saturday after weeks of negotiations.
The government is set to run out of money to pay its bills in early June if it does not increase the debt ceiling.
“The agreement prevents the worst possible crisis, a default, for the first time in our nation’s history,” Biden said at the White House on Sunday. It “takes the threat of a catastrophic default off the table.”
McCarthy, discussing the agreement at the Capitol, said, "At the end of the day, people can look together to be able to pass this.”
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While the two leaders expressed support for the deal, progressive Democratic lawmakers from the party’s ideological left, and Republicans from the party’s right-wing immediately voiced opposition.
“The agreement represents a compromise, which means not everyone gets what they want. But that’s the responsibility of governing,” Biden said in a statement. He called the pact “an important step forward that reduces spending while protecting critical programs for working people and growing the economy for everyone.”
On Sunday, McCarthy, on the “Fox News Sunday” show, said that from Republicans’ perspective, “There’s so much in this that is positive. It will not do everything for everyone, but this is a step in the right direction.”
The debt ceiling needs to be increased so the government can borrow more money, or the U.S. government will run out of cash to pay its existing bills June 5, Treasury Secretary Janet Yellen had warned Congress.
Yellen has said that without an increase in the debt ceiling or a suspension of the borrowing limit, interest on U.S. bonds held by foreign governments and individual American investors would be imperiled, as well as stipends for U.S. pensioners and salaries for government workers and contractors. Without enough tax receipts coming into U.S. coffers to pay its bills, the government would be forced to prioritize which payments to make.
Another part of the agreement would also speed up the approval process for new energy projects.
The pact also left in place Biden’s plan to write off up to $20,000 in student loan debts but says that loan recipients will have to start making payments that had been paused during the coronavirus pandemic. The provision would become moot if the Supreme Court overturns Biden’s authority to revoke the debt in a challenge to his action that is expected to be decided by the end of June.
Democratic Representative Pramila Jayapal, the leader of the 102-member House progressive caucus, told CNN’s “State of the Union” show that Biden and Democratic House leader Hakeem Jeffries should worry about progressives’ support for passage of the debt ceiling increase.
Jayapal criticized expanding work requirements for food stamp recipients and said she did not know whether she would vote for the debt ceiling increase.
“I’m not a big fan of in-principle [agreements] and frameworks,” she told CNN. “That’s always, you know, a problem if you can’t see the exact legislative text. And we’re all trying to wade through spin right now. But I think it’s going to come down to what the legislative text is.”
Among Republicans, Representative Bob Good wrote on Twitter, “No one claiming to be a conservative could justify a YES vote” on the package.
Another Republican critic of the deal, Representative Ralph Norman, tweeted, “This ‘deal’ is insanity.” He said a possible $4 trillion increase in the debt over the next two years “with virtually no cuts is not what we agreed to. Not gonna vote to bankrupt our country. The American people deserve better.”
Some information for this story came from The Associated Press, Agence France-Presse and Reuters.