Republican lawmakers and US President Joe Biden had reached a principled agreement to raise the debt ceiling and prevent a catastrophic default, US media reported on Saturday.
The breakthrough came after a long deadlock as the two sides got down to business in the final race for an arrangement in front of a basic June 5 cutoff time for a deal.
According to two sources familiar with the negotiations, U.S. President Joe Biden and top Republican in Congress Kevin McCarthy have reached a tentative agreement to raise the federal government's $31.4 trillion debt ceiling, ending a months-long standoff.
"But, I’m not sure it’s completely settled. Might be one or two small things they need to finish. But close enough to move forward," the second source said as quoted by Reuters.
Biden and McCarthy held an hour and a half call earlier on Saturday night to examine the deal.
As long as they were able to get the deal through the narrowly divided Congress before the Treasury Department runs out of money to cover all of its obligations—which it warned would happen if the debt ceiling is not raised by June 5—the deal would prevent an economically destabilising default.
The Republicans, who currently hold control of the House of Representatives, have advocated for severe spending reductions and a number of other conditions, such as the imposition of new work requirements on some benefit programs for Americans with low incomes and the removal of funds from the Internal Revenue Service, which is the US tax agency.
They stated that they want to slow down the growth of the United States' debt, which is currently roughly equivalent to the annual economic output of the nation.
The details of the final deal were not quickly accessible, however negotiators have consented to cover non-protection optional spending at 2023 levels for quite a long time, in return for an obligation roof increment over a comparable period, sources told Reuters.
In order to reach a compromise that can pass the House with a Republican majority of 222-213 and the Senate with a Democratic majority of 51-49, the two sides must carefully thread the needle.