House Speaker Kevin McCarthy and President Joe Biden announced Saturday that they had reached a deal in principle to raise the debt limit days ahead of a possible default, marking a major breakthrough in a monthslong impasse over the issue.
“After weeks of negotiations, we have come to an agreement in principle.” McCarthy told reporters late Saturday. “We still have a lot of work to do, but I believe this is an agreement in principle that’s worthy of the American people.”
Biden released a statement shortly after acknowledging the breakthrough, which he called “an important step forward” that safeguards his legislative achievements while noting that it “represents a compromise, which means not everyone gets what they want.”
“That’s the responsibility of governing,” the president said.
With the agreement, which came after Biden and McCarthy spoke on Saturday evening, both leaders are expected to save face, in true Washington style. While Biden could protect the bulk of his legislative achievements, McCarthy could still tout that he used the debt limit to cut spending. And Americans could avoid a costly and unprecedented default.
For months, House Republicans and the White House have been at odds over the debt limit and whether it should be tied to spending cuts. Though the White House initially took a no-negotiations stance, saying that it would not allow Republicans to hold the economy “hostage,” Biden ultimately came to the table after the House approved a debt limit hike tied to spending cuts that were a nonstarter for Democrats – and as the Treasury Department warned of a possible default in early June.
McCarthy noted that the agreement includes “historic reductions in spending,” reforms that will “lift people out of poverty into the workforce” and would not include new government programs or new taxes. Biden made clear that the agreement protects “critical programs for working people” and “prevents what could have been a catastrophic default.”
But the leaders also made clear that much work remains to be done. House Republicans were briefed Saturday night, while the text of the bill was still being written. McCarthy said he expects the text of the bill to be released on Sunday, with a vote in the House on Wednesday. After passage, the legislation would head to the Senate.
The agreement comes with little time to spare, after Treasury Secretary Janet Yellen announced on Friday that the government is expected to run out of money to pay its bills on June 5.