- The proposed compromise would increase the debt ceiling for 2 years.
- Biden and McCarthy must win over members of Congress from their respective parties.
An agreement in principle to extend the debt limit date, now at $3.4 trillion, has been agreed between US President Joe Biden and Representative Kevin McCarthy only days before the default date.
The proposed compromise between the two sides would increase the debt ceiling for two years while imposing expenditure caps. Before June 5, when the US government runs out of money to pay its debt, the accord still requires approval from a divided Congress. House Speaker Kevin McCarthy stated it “has historic reductions in spending,” while US President Joe Biden called it a “compromise.”
Biden stated:
“The agreement represents a compromise, which means not everyone gets what they want.”
Catastrophic Default Avoided
Biden said that the decision to raise the debt limit was “good news for the American people” since it averted a “catastrophic default” that would have caused a recession, wiped out retirement funds, and cost millions of jobs.
Non-defense government expenditure, according to BBC, will remain steady for two years before increasing by 1% in 2025. The Republican lawmaker said there is still more to accomplish, but that this deal in principle is one that the American people deserve during his speech at the Capitol Hill.
He continued by saying that he plans to complete crafting the law this coming Sunday, meet with President Joe Biden on Monday, and vote on the agreement on Wednesday, May 31.
Before the vote next week, however, Biden and McCarthy must both win over members of Congress from their respective parties to support the agreement they have struck.
