Senior White House negotiators and Republicans on Saturday reached an agreement in principle to raise the debt limit for two years while cutting and covering some government spending over the same period, marking a breakthrough after a long series of talks about the crisis that brought the country within days of that date. Three people familiar with the agreement said it was the first default in history.
Congressional approval of the plan was not confirmed before June 5th, when the Treasury Department was expected to exhaust its ability to pay its obligations, particularly in the House of Representatives. Republicans have a slim majority in the House of Representatives, and right-wing lawmakers who have demanded deeper budget cuts in exchange for a higher borrowing limit are sure to revolt.
But the compromise, which would effectively freeze federal spending that was on track to grow, had the blessing of both President Biden and Speaker Kevin McCarthy, raising hopes that he could break a fiscal deadlock that has gripped Washington and the nation for weeks, threatening an economic crisis. . The two spoke on the phone Saturday night to resolve the final sticking points.
The people who spoke about the deal did so on condition of anonymity because they were not authorized to comment publicly prior to the official announcement.
It was organized with the goal of drawing votes from both parties, though it is likely to infuriate not only conservative Republicans but also Democrats angry at being asked to vote on cuts they oppose with the threat of default. Still, it gives Republicans the ability to say they’ve managed to reduce some federal spending — even as funding for military and veterans’ programs continues to grow — while allowing Democrats to say they saved most local programs from deep cuts.
This is a developing story. Check back for updates.