President Biden and Speaker Kevin McCarthy on Saturday reached an agreement in principle to lift the debt limit for two years and cut and limit some government spending over the same period, a breakthrough. after a protracted series of crisis negotiations brought the country within days of its first default in history.
Congressional passage of the plan before June 5, when the Treasury is expected to exhaust its ability to pay its obligations, is not guaranteed, especially in the House of Representatives, where the plan plan to review the plan on Wednesday. Republicans have a narrow majority in the room and right-wing lawmakers who have demanded significantly larger budget cuts in exchange for lifting the borrowing limit have revolted.
But the compromise, which would effectively freeze growing federal spending, has the support of both the Democratic and Republican presidents, raising hopes that it could disrupt Breaking the financial impasse that has gripped Washington and the country for weeks. threatened economic crisis.
Mr. Biden urged the House and Senate to pass the deal in a late-night statement released by the White House, saying it would prevent a catastrophic default.
“It’s an important step forward in reducing spending while protecting vital programs for working people and growing the economy for all,” Biden said. “And the agreement protects the key priorities and legislative achievements of me and the Democrats in Congress. The deal represents compromise, which means that not everyone gets what they want.”
The President and Mr. McCarthy spoke by phone Saturday night to work out the final sticking points.
At a late-night news conference outside his Capitol office that lasted just a minute, McCarthy said the deal included “historic cuts in spending, consequential reforms that will help everyone people out of poverty enter the workforce, curb excessive government access” and will add no new taxes. He declined to answer questions or provide specifics, but said he plans to publish the text of the legislation on Sunday.
“We still have a lot of work to do tonight to finish all of this writing,” he said.
The plan was structured with the aim of garnering votes from both parties, although it angered not only conservative Republicans but also Democrats when asked to vote on the cuts. reduction that they object to the looming default risk.
However, it does give Republicans the ability to say they have succeeded in reducing some federal spending — even as funding for the military and veterans programs will continue to increase — while allowing Democrats to say they’re not getting a substantial cut to most programs in the country.
The deal would suspend the borrowing limit, currently $31.4 trillion, for two years — enough to get through the next presidential election.
According to a person familiar with the deal, it will also impose new work requirements on some government aid recipients, including food stamps and the Temporary Assistance for Needy Families program. It will place new limits on how long certain food stamp recipients – those under 54, without children – can benefit from the program. But it will also expand access to food stamps for veterans and the homeless, one person said, speaking on condition of anonymity because they were not authorized to discuss the details of the package.
The tentative deal also recovers some unspent money from the previous pandemic relief bill and reduces $10 billion — from $80 billion to $70 billion — in new enforcement funding for the IRS. to crack down on tax fraud. It includes measures to speed up environmental assessments for certain energy projects and a provision to force the president to save money to offset the cost of a unilateral action, such as such as student loan forgiveness – although government officials can circumvent that requirement. It also includes an enforcement measure aimed at preventing a government shutdown later this year.
Work requirements and environmental assessment reform were among the last details the two sides discussed on Saturday.
The White House and congressional negotiators — working around the clock on the Capitol, at the White House and virtually — pushed the resolution to the last minute, increasing pressure on lawmakers to accept a settlement. The law was unpopular with activists on both the right and the left. Economists and Wall Street analysts warn that a default would be devastating and potentially lead to a global economic crisis.
To avoid default, the House and Senate must approve the agreement and send it to Mr. Biden for him to sign. That promises to be a burden for both Mr. McCarthy and Representative Hakeem Jeffries of New York, Democratic leaderwho must now assemble a coalition of Republicans and Democrats in the House of Representatives to push it through.
Mr. McCarthy has repeatedly said he believes a majority of his convention will vote for the deal, but it remains unclear how many Republicans will support a compromise – and how many Democrats may be needed. vote on that deal to make up for GOP defections.
The path is also potentially bumpy in the Senate, where swift action requires bipartisan support and conservatives have signaled they are not willing to follow.
In a sign of their displeasure, House Freedom Caucus members are gathering to identify procedural tools to delay passage of the deal or make the bill more conservative.
Republicans have refused for months to raise the debt limit unless Mr. Biden agrees to cut spending and reduce future debt – risking default to use their leverage. The final deal accomplished their goal, but only modestly. A New York Times analysis of the spending cap at the heart of the deal found it would reduce federal spending by about $650 billion over a decade, if spending increases at the expected rate of inflation. after lifting the limit for two years.
The cuts in the package are almost certainly too modest to win the votes of hardline conservatives and too strict to win the votes of progressives in the House. Lawmakers in the House Freedom Caucus openly criticized the deal on Saturday night, and the Parliament’s Radical Caucus had begun raging about it even before negotiators. complete the agreement.
But budget hawks urge adoption. “The process is stressful, risky, and terrible, but ultimately, we plan to enact savings and lift the debt ceiling,” said Maya MacGuineas, chair of the Federally Responsible Budget Committee. That’s a necessity.” Washington DC.
The agreement will impose limits on discretionary spending for two years, though those limits will apply differently to military spending than the rest of the federal budget. Military spending will increase next year, as will spending on the care of some veterans. Spending on other domestic programs will be down slightly — or almost unchanged — from this year’s levels.
The announcement comes after months of standing on the brink of politics. Mr. Biden and the congressional Democrats initially insisted that House Republicans raise the debt ceiling unconditionally, but were satisfied after Mr. McCarthy chaired his conference to Pass the bill to increase the nation’s borrowing limit in exchange for cutting government programs by an average of 18 percent over a decade. Republicans deliberately avoided detailing exactly what programs they intended to cut, but the bill’s passage forced Mr. Biden to do what he has said he would never do: negotiate over raising the debt ceiling.
The final agreement was made by a team led by Mr. Biden’s adviser, Steve Richchetti; his budget director, Shalanda Young; and two of McCarthy’s closest confidants, Congressmen Patrick T. McHenry of North Carolina and Garret Graves of Louisiana. They agreed to use some creative accounting manipulation in the deal to help provide political cover for both sides.
But Mr McCarthy is still likely to face an uprising from far-right lawmakers in his conference, whom he has empowered as part of concessions he has made to become an actor. fake news in January, after a tumultuous 15-round election.
On a separate call with members of his conference on the emerging deal, Mr McCarthy sold the deal as a victory, saying there was little in the package that Democrats supported. But far-right lawmakers in the Freedom Caucus, who for days have expressed frustration with the agreement’s emerging contours, have expressed their displeasure.
Representative Bob Good of Virginia said everything “they fight for” in the House bill is removed from the deal, according to a person familiar with the comments, who spoke on condition of anonymity to describe a private call. McCarthy and his deputies defended the deal, citing a number of wins, including a return of money to the IRS.
Radicals also vented their displeasure before the deal was announced.
Lindsay Owens, executive director of the Liberal Foundations Partnership in Washington, criticized the deal for forcing budget cuts for domestic programs — and in particular, cuts in enforcement money for the IRS.
Giving in to Republican demands to impede the IRS’s ability to track down wealthy tax evaders is a failed proposition for Democrats, she said. “It undermines a key policy initiative, drains a good source of revenue, and requires a caucus to vote down a policy that is extremely popular with the public.”
Peter Baker contribution report.
