Washington: President Joe Biden of the Democrat and Kevin McCarthy, leader of the Republican, announced a deal Saturday to raise the debt ceiling, dragging the United States back from the precipice of default with only a few days to spare.
According to international media, the US Congress will vote on the deal to extend the government’s borrowing authority on Wednesday, just shy of the June 5 “X-date” when the Treasury estimated the government would no longer be able to pay its bills, plunging the world’s biggest economy into turmoil.
In a statement, President Biden said that the deal was “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.”
Speaker Kevin McCarthy, who spoke with Biden on Saturday to close the deal, said that there was still “a lot of work to do, but I believe this is an agreement in principle that’s worthy of the American people.”
US to default on debt? Treasury Secretary Yellen calling CEOs personally to warn
The House would “then be voting on it on Wednesday,” the Republican speaker continued, after consulting with the president once more on Sunday and supervising the bill’s final writing.
Raising the debt ceiling — a legal manoeuvre that takes place most years without drama — allows the government to keep borrowing money and remain solvent.
Republicans wanted significant cuts in expenditure this year, primarily in social spending for the poor, in exchange for lifting the debt ceiling, arguing that it was time to administer bitter medicine to the nation’s massive $31 trillion debt.
