The White House and Congress reached agreements to avoid a default

Negotiating Debt Ceiling Agreements – Negotiating a Deal with the U.S. Government – Sources familiar with the negotiations

Negotiators have hashed out some details of a deal to prevent the country from defaulting on its debt as soon as next, according to a source familiar with the talks.

The contours of a debt ceiling deal are largely worked out – including on discretionary spending and defense spending — but sticking points include work requirements and permitting, the source told NPR.

“We know it’s not easy, but we’re going to make sure we’re not just trying to get an agreement,” he said. We’re trying to get something that changes the trajectory for the American people.

The deal being worked out by negotiators would raise the government’s borrowing limit for two years, while putting two-year caps on federal spending, said the source, who was not authorized to speak about the ongoing negotiations. Initial details were reported by the New York Times.

Republicans want to cut IRS funding, but the two sides are close to an agreement. Both sides are opposed to work requirements for social benefits programs.

Source: https://www.npr.org/2023/05/26/1178407804/debt-ceiling-negotiations-deal-update-biden-mccarthy

Breaking the Wall: A Deal for the Debt Crisis in the U.S. Congress Against a Deflationary Clause

On Monday, Treasury Secretary Janet Yellen reiterated the warning that Congress has until about June 1 to raise or suspend the debt limit. McCarthy has vowed to give members 72 hours to review text before putting it to a floor vote. The measure will then have to be voted on by the Senate.

A recession could result from a default. A default would affect the financial markets, raise mortgage rates, make it harder for businesses and people to borrow money, and could cause government employees and Social Security recipients to not pay their bills.

One of McCarthy’s negotiators told reporters Friday that the issues that remain are more difficult and challenging.

Negotiators for the administration are currently not scheduled to meet with McCarthy in person on Friday, McHenry said, but the two groups continue to talk virtually.

The deal also follows weeks of negotiations and a tense creep toward a potential default on the nation’s loans. The announcement shows that the Republicans and Democrats have the support necessary to pass the legislation, despite the expected opposition from the extreme right of the two parties.

The breakthrough occurred an hour after McCarthy and Biden had spoken on the phone. In the morning, Biden spoke with Schumer and Jeffries.

The bill is being written by key negotiators for both sides. McCarthy expects that by Sunday they will finish drafting the bill and he will have another conversation with Biden, before posting the text of the legislation Sunday afternoon.

McCarthy was happy to see that the agreement had historic reductions in spending and would not have new taxes or government programs. He added that the deal included “consequential reforms that will lift people out of poverty and into the workforce.”

“The agreement represents a compromise, which means not everyone gets what they want,” Biden said in the statement. “That’s the responsibility of governing.”

McCarthy said that the two sides had come to an agreement in principle. “We still have a lot of work to do but I believe this is an agreement in principle that’s worthy of the American people.”

The Speaker of the House said that there was an agreement in principle to avoid a default.