Amid growing fears of a possible default in early June, US President Joe Biden and Republican Kevin McCarthy have reportedly reached an “agreement in principle” to raise the federal government’s debt ceiling by trillions of dollars.
According to a May 28 report Reuters quoted two sources familiar with the negotiations as saying the “tentative” deal to raise the US government debt ceiling to $31.4 trillion was reached after a 90-minute phone call between Biden and McCarthy on 27 may.
It was 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 the national security.
“Negotiators agreed to cap non-defense discretionary spending at 2023 levels for two years, in exchange for raising the debt ceiling over a similar period,” the sources said.
One of the sources reportedly pointed out that the “agreement in principle” still has a few things to finalize, saying:
“But, I’m not sure it’s completely settled. Maybe there’s a little thing or two they need to finish. But close enough to move on.”
It was reported that the deal would prevent an “economically destabilizing default”. It was pointed out that it must be passed by Congress before the Treasury “runs out of money” – which it was recently warned would happen on June 5 if the debt ceiling was not not raised.
This is a developing story, and more information will be added as it becomes available.