YEREVAN (CoinChapter.com) — US President Joe Biden and House Majority Leader Kevin McCarthy have reached a tentative agreement to address the pressing issue of raising the US debt ceiling. This development comes after weeks of intense negotiations between the two political leaders.
Under the proposed deal, Congress will agree to raise the $3.4 trillion US debt ceiling by an additional $4 trillion for two years. This will allow the Government to continue borrowing funds to meet its financial obligations. Moreover, it will grant the Biden Administration some relief ahead of the 2024 Presidential polls.
The agreement demonstrates a crucial bipartisan effort to prevent a potentially catastrophic default on US debt.
Joe Biden and Kevin McCarthy were pleased with the outcome
The agreement to increase the debt ceiling was met with enthusiasm from Republicans and Democrats alike. Both sides celebrated the development and progress, expressing hope that it would lead to a more concrete, long-term solution.
Kevin McCarthy shared the news about the tentative deal on his official Twitter page.
“I just got off the phone with the president a bit ago. After he wasted time and refused to negotiate for months, we’ve come to an agreement in principle that is worthy of the American people,”
he announced.
Calling the deal “an important step forward”, President Biden described it as an important compromise to prevent a default.
“This agreement is good news for the American people, because it prevents what could have been a catastrophic default and would have led to an economic recession, retirement accounts devastated, and millions of jobs lost,”
President Biden announced.
The US Treasury Secretary Janet Yellen had warned on several occasions that the Government would run out of money by early June. To prevent a default, she had written several letters to Congress, urging them to either lift the debt ceiling or abolish it completely.
The Republican-controlled House, heading her pleas, increased the $3.4 trillion debt ceiling by an additional $1.5 trillion. However, the bill also imposed a 14% cut on government spending, a measure that has met the strong disapproval of President Joe Biden and his Democratic party colleagues.
The Biden Administration demanded an unconditional debt ceiling increase and refused to negotiate. However, it now seems he has folded and agreed to spend cuts. The new agreement comes just ahead of the updated debt ceiling deadline of June 5, 2023.
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Will the Congress vote to support the deal?
The proposed agreement between Biden and McCarthy still requires approval from both chambers of Congress. If successfully passed, it would provide a measure of relief to financial markets and alleviate concerns about a potential default. Failure to raise the debt ceiling could have severe consequences for the US economy and global financial stability.
If approved, the deal would provide a temporary increase in the debt ceiling, ensuring that the US can meet its financial obligations until a more comprehensive solution is reached. This short-term fix would grant lawmakers additional time to negotiate a longer-term plan to address the issue.
However, Kevin McCarthy now needs to convince his party colleagues to vote for the measure. The last bill to increase the debt ceiling passed with a narrow 217 votes for and 215 against. Four Republicans broke ranks with the party and voted against the bill.
The Democrats hold a very narrow majority in the US Senate. If some hard-core Democrats disagree to support any spending cuts, it could cause problems for Joe Biden.
The previous meetings with Joe Biden and the Congressional leaders at the White House had failed to bear any results. The American citizens will be looking to see if this deal will be any different.
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